Risk managers need to make sense of a large quantity of data and there is not a single metric that will tell them all they need to know, according to Jorge Mina, Global Head of Analytics at MSCI.
“They need to look at different metrics over time – and the amount of information that they need to make sense of is tremendous,” he told Traders Magazine.
Gathering and understanding what’s important, what needs to be looked at right now, what is relevant, and what needs to be acted upon is a “critical challenge” that risk managers have, he stressed.
On September 8, MSCI launched Risk Insights, the first module of a new analytics platform, MSCI Insights, that calculates, stores, and delivers a broad range of risk measures to help investors identify trends and respond to rapid changes in markets.
According to Mina, MSCI Insights streamlines the entire risk management process from portfolio gathering, the generation of risk data, to the translation of that risk data into insights.
“This process allows everyone in the organization to understand levels of risk, how they change, where they come from, and what to do about them,” he said.
“The risk management process is much more quick and efficient when you have the ability to go from portfolio data to the information needed to make investment,” he added.
MSCI Risk Insights automates many analysis and reporting tasks usually performed manually by risk analysts.
Automation allows investors to quickly and effectively understand the overall level of risk in their portfolios, how that risk has changed, what caused the changes, and what actions can be taken to achieve their unique investment goals.
MSCI Risk Insights provides investors with historical risk data and the ability to customize a set of dashboards delivered on the cloud containing a broad set of metrics including time-series risk, factor risk, and stress tests.
These data visualizations can help investors seeking to: find concentrated positions, sectors, factors, or portfolios; identify what contributed to a portfolio’s change in risk and understand the elements that drive the risk in those portfolios over time; analyze how portfolios and their risk profiles have changed over different periods and regimes; and pinpoint statistically significant outliers.
MSCI Risk Insights fully leverages the same MSCI risk analytics used by hundreds of the largest investors worldwide.
The Risk Module of MSCI Insights dynamically and visually explains not just the levels of risk over different horizons, but how and why it has changed over any time period, Mina said.
“Was it due to changes in the market or changes in the portfolio, and what kind of changes are driving the metrics? This visual story-telling transforms a process that generations millions or billions of data points into easily understood stories about what is occurring with your portfolios,” he added.
Institutional investors will be able to access a wide range of MSCI data and analytics through MSCI Insights, which will feature performance attribution, index data, ESG data, and Climate data modules.
“Additional MSCI Insights modules are slated for release in the fourth quarter of 2022 and in 2023,” Mina said.