Risk Management Engine
Risk Management is a centralized operation of LongFin. Our diversification financial performance makes our firm as a less dependent on idiosyncratic events in any country.
We tout our expertise and emphasis on Risk Management.
- Law of Large Numbers
- Diversification across Geographies
- Diversification across Asset Classes
- Diversification across multiple Commodities
- Diversification across multiple Currencies
Risk Measurement Tools and their Limitations
- We believe in Central Limit Theorem and independent events of 'n' time leads to a Normal Distribution with a positive Skews.
- We combine each independent event to 95% of VAR (Value at Risk) Models, Skewness and Kurtosis.
Our trading involves little exposure to flat price risk through derivative transactions of futures contracts.
Price Risk hedging involves Basis Risk. LongFin uses its own optionalities of Theta, Gamma, Vega risk using Short Term Interest Rate Futures or Options.
Contractual and Counterparty Risk
LongFin's Alternative Risk Transfer (ART) solutions insulate contractual and counter party risk.
Political and Country Risk
We use Alternative Risk Transfer (ART) to Export Credit Agencies (ECA) or Trade Finance Insurance companies to mitigate Political and Country Risk.
Our real-time trading RMS is built into automatic platform which detects and generates the warning message to the risk team whenever it is crossing the pre-defined limits (3 levels) and continuously reconciles internal order transactions against the order execution of the global exchanges.
How we Reduce the Risk?
1. Diversification by trading in multiple Asset Class across commodity markets.
2. Integration by owning multiple Real Estate Assets across the globe that provides opportunity to self-hedging.