03/10/2011
By Matt Ritchie
Institutional investors are placing an increasing priority on risk management and stress testing, according to a new survey from MSCI.
Announcing the results of the survey, Back to the Future of Risk Management, MSCI said the study revealed a “paradigm shift” of the risk management function as more resources are dedicated to the management and measurement of risk.
Many of the 85 participants had shortened their strategic asset allocation horizon, often from 3 years to 1 year, and the number of surveyed firms using stress testing had increased by almost 300 per cent since 2009.
Executive director of research at MSCI Frank Nielsen said the survey showed a continued evolution through “uncertain market times”.
“The results reflect how risk management has become both a high priority and a more formalised component of the overall investment process for our clients.”
Other findings highlighted by the firm included that plan investment horizons and asset allocation decision making have become more dynamic, while stress testing and extreme - tail - risk hedging have become a “very high priority”.
Further, external management selection criteria largely depended on transparency and risk control as allocation to alternatives increased.
For the full report, click here
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