Frequently Asked

The Model Risk Management

The BAM Model

Our business philosophy is to bring together multiple risk-taking teams who have specialized expertise and a process that emphasizes deep fundamental work in their areas of responsibility. These teams all work within a well-defined risk framework that encourages true alpha generation and limited directional risk taking. We dynamically allocate capital across asset classes and strategies to maximize the opportunity set that we are seeing. We encourage internal transparency and collaboration amongst these teams to improve their individual risk. Our risk-taking teams have a proven ability to manage within this type of setting and possess strong track records of success through many different market cycles.

Risk Framework

We are known for possessing a risk management culture that permeates all aspects of our business. The cornerstones of our risk management framework include:

  • A platform of top risk management analytical tools available to measure risk across strategies and geographies.
  • A well-defined and consistently applied framework for identifying and managing risk.
  • A risk framework designed to produce a consistent stream of uncorrelated returns in liquid markets.
  • An organizational structure which allows risk to be managed in an independent manner and with the authority to cut sizing and portfolios.

Balyasny Risk Management Flows Through The Entire Investment Process

Recruiting &
Tight PM
  • Multi-month to Multi-year hiring process
  • Intensive analysis of past performance and idea generation
  • Low correlation to existing teams
  • Additive to Firms's investment information flow
  • Possesses a strong fundamental research process & domain expertise
  • Non directional / Tight Net Equity Exposure limits
  • Contractual stop outs / drawdown limits
  • Stress tests
  • Liquidity constraints
  • Macro VAR Limits
  • Position Concentration Limits
  • Volatility Targets
  • Dynamic firm risk overlay
  • Defined Leverage range
  • Sector and team concentration limits
  • Centralized trading desk
  • EZE Castle Trade Capture/Recon
  • Intraday / Daily Evaluation
  • Automated Violation Flags
  • Proprietary idea tracker research template
  • Post trade attribution and analysis
  • Risk Metrics Predictive Performance
  • BARRA analysis
  • Ad Hoc Reports
  • VAR analysis
  • PM development led by a dedicated performance analytics team

The Risk Group and the Executive Committee combine active monitoring of quantitative statistics together with constant qualitative assessment of both our PMs and the markets to quickly adjust capital allocations. The risk management and capital allocation process has been honed through almost ten years of real life experience in challenging markets.

* As of 9/1/2016