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Risk Discipline

Risk Discipline

Using industry-leading technology and data analyses, we capture market opportunities while mitigating investment, operational and organizational risks.

A holistic approach.

We view risk management as a competitive advantage, contributing directly to alpha. Our designated Risk team, led by Chief Risk Officer Alex Lurye, combines decades of experience navigating challenging markets with innovative, technology-enabled approaches to provide deep insight into sources of risk and tools to harness it for alpha generation. From sophisticated portfolio construction to selective hiring of top talent and rigorous training, risk management permeates every aspect of our business. To this end, we build close relationships and ensure ongoing dialogue with risk-takers and with all other teams across the organization.

Our risk management framework.

Risk management is a critical part of our investment process. Working within a well-defined risk framework, we leverage the unique skills, expertise and research outputs of our teams to tailor risk exposure across our portfolio in a way that maximizes returns and reduces potential drawdowns.

Risk Level Porfolio Liquidity Profile Funding Tail Exposure

Risk Level

We take an adaptive approach to risk management, empowering investment teams with world-class tools and systems to quantitatively evaluate, measure, monitor and optimize investment portfolios. Our Investment Committee plays an active role in this ongoing and evolving process.

Funding

Our Risk team works closely with our Repo and Portfolio Finance teams to manage funding risk on the portfolio of securities. We closely monitor cash reserve levels to ensure a sufficient level of capital under both normal and stressed market conditions. The margin utilization of each trade feeds into our portfolio optimization process to ensure efficient use of this resource.

Tail Exposure

We systematically evaluate all potential stress factors and scenarios to manage exposure across our portfolio. Our focus on understanding economic and political event risks allows us to identify and mitigate tail exposures to ensure the right balance between risk and reward. Our focus on sector allocation ensures that we have a balance of risk across every investible sector and can seamlessly navigate market volatility to deliver returns for our investors.

Portfolio Liquidity Profile

We use a range of approaches to monitor portfolio liquidity, both the expected timescale to liquidate some or all of the positions and the expected cost of doing so. We ensure that even in more liquid asset classes, such as listed equities and sovereign bonds, the firm’s positions do not become sufficiently concentrated to breach liquidity thresholds. In addition to monitoring current market liquidity levels, we model liquidity scenarios during periods of market stress.

Innovative risk-taking.

We embrace new ideas, allocate capital to new approaches responsibly and scale what works.

Delivering best in class returns.

BAM’s risk and investment teams are closely integrated, working in tandem across strategies, asset classes and geographies to deliver consistent and uncorrelated returns for our investors. Learn more about our world class investment platform.

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Impact & Insights

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PARTNERSHIP HIGHLIGHT: Synchronicity Earth + BAM

Over the past four years, our relationship with Synchronicity Earth has been extremely rewarding and we are proud of the work that has been accomplished through this partnership.

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