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Risk Framework

Our Risk Framework

Risk management permeates all aspects of our business, from investment staff hiring all the way through clearance and settlement.

BAM focuses on sources of risk.

Using industry-leading technology and analyses, we are committed to mitigating organizational, operational and investment risks.

Organizational Risk

  • Focus on Selective Hiring & Retaining Top Talent
    • Built on philosophy of demanding top-tier investment performance from our PMs
    • Team dedicated to recruiting and business development, building relationships with top investment talent around the world
    • Extensive in-person interview and an analytically rigorous diligence processes
    • Dedicated PM Development resources to improve odds of generating return and limiting “tuition payments”
    • Formal development programs, cross-training efforts, mentorship programs, and PM teach-ins
    • Unique collegial culture and partnership structure to attract/retain top talent

Operational Risk

  • Centralized Trading Execution Desk
    • Provides additional oversight and integration with Risk Management
    • Value added flow information
  • Legal and Compliance Teams
    • Five attorneys on staff
    • Robust compliance infrastructure, combining technology and human interaction
    • Prevent and detect compliance violations
    • Oversee, monitor, and satisfy all regulatory-based deadlines
  • Sophisticated Operational Network
    • Global processes and controls
    • Extensive systems support, leveraging internal and outsourced functions 
  • Tested Global Disaster Recovery
    • Eight geographic locations with redundancies
  • Independent Committees
    • Credit Counterparty Committee focusing on broker execution, country and financing risks
    • Valuation
    • Allocation Committee

Investment Risk

  • Risk-Adjusted Capital Allocation
    • New hires generally start with less than 5% of total exposure
    • Capital scales with success
    • Dynamic bottom-up process, observing how much capital the PM and sector can absorb successfully
    • Utilize multiple layers of quantitative evaluation
    • Part of the annual Business Planning cycle, with final start of year allocations combining analytics and the expected opportunity set to arrive at a final plan
  • PM Risk Controls
    • Differ by strategy type but focus on defined liquidity, net exposure, capital reduction and stop out triggers and concentration limits      
  • Active monitoring and analysis
    • Use a combination of third-party and proprietary systems to measure, monitor and evaluate portfolio, strategy and individual PM risks
    • Systematic and ad-hoc reports to Investment Committee, Executive Committee, Macro Strategy Committee and Portfolio Managers
    • Investment Committee reviews all major risks that could cause an impact of 25 bps
    • Constant focus on improving our risk-taking processes, challenging current structures and learning from our mistakes.