Let’s face it. Risk managers have a tough job. They must analyze potential risk scenarios from all angles and act quickly enough to allow traders to make money and conservatively enough not to blow up the firm!

Often, traders move faster than risk managers can keep up. As a result, many managers are unwillingly operating on either side of a losing spectrum due to inefficient or limited risk management tools and resources.

Either a trader sets up a trade, and the risk managers cannot analyze the risk, so they allow the trade without installing the appropriate risk protocols. Or they hold up the trade until they can get the proper system in place to perform a thorough risk analysis and end up missing opportunities.

We all know the predominant trading theory that if you focus on properly assessing risk and protecting yourself during market downturns, you’ll automatically be poised to take advantage of the upside and recover from losses.

Successful risk management is a balancing act between speed and control. It’s a tall order, but one that can be achieved with the right combination of enterprise risk management software and strategy.

Automation is the Key

Managers can’t be tied to a computer screen all day. To grow the firm, they need the time and freedom to pursue other critical parts of the business. That’s where automation and algorithms become the risk manager’s little helpers.

In an industry where speed and control are everything, you need high-speed tools that give you a 360-degree vantage point into all aspects of risk and the velocity to analyze and execute quickly. A robust risk management solution will help you take advantage of opportunities that lead to scaling your business.

The Rival Systems team, having spent years working with some of the best risk managers and traders in the industry, built Rival Risk, enterprise trading risk management software, to address risk management pain points. By creating algorithms and automation to alleviate mundane but essential tasks, managers have clear insight across accounts with push-button ease and the time freedom to manage other critical aspects of the business.

Here are a few ways the Rival Systems team has streamlined the risk management process and eliminated common pain points for a seamless user experience using Rival Risk.

Synthetic Pricing for Illiquid Products

Pain Point:

  • No current market data. If a trading group is trading in illiquid markets the risk manager has no way of seeing the P&L or risk throughout the day. In other systems the risk manager has to wait until settlement prices are published at the end of the trading session to discover if the trading group made or lost money on the day.

Rival Risk Solution:

  • Calculate synthetic markets. The system calculates real-time synthetic prices for illiquid futures by either calculating a theoretical value based on the underlying components that drive the future, calculating an implied market using a combination of the liquid front month future and spread markets, or by defining a fixed relationship to a more liquid product.

Real Time Margin

Pain Point:

  • Limited Visibility. Other systems either calculate margin based on their formula or only pull in the start-of-day array files form the exchange.

Rival Risk Solution:

  • View real-time margin. The system calculates real-time margin by integrating with each exchange’s margin engine as well as the OCC for Risk Based Haircuts and Customer Portfolio Margin. The system automatically pulls in the latest exchange array files throughout the day and calculates margin based on open and current positions. Users can easily see how much margin has changed throughout the day. Users can also upload manual trades to see how they will impact margin. Margin is calculated at the firm, master account, and sub-account levels based on the net position at each level.

On Demand VaR (Value at Risk)

Pain Point:

  • Slow or End of Day VaR. Other systems only calculate VaR at the end of the day. Some people use one system to view real-time risk and another to run VaR.

Rival Risk Solution:

  • Run Real-Time VaR Scenarios. Allows the user to run VaR throughout the day based on current positions and market volatilities. Most systems cannot run VaR intray-day or it takes hours to run for all accounts across a firm. Our system calculates VaR using Monte Carlo simulations with our proprietary covariance matrix based on three years of historical data. Users can calculate VaR in seconds across all of their accounts.

Real Time Alerts

Pain Point:

  • Too many accounts to track efficiently. If risk managers monitor many accounts, it’s tough to perform risk assessments and manually track all the metrics to ensure no one is outside their risk thresholds. Consequently, risk managers are tied to their desks to monitor the system visually.

Rival Risk Solution:

  • Set up automated alerts if risk parameters are triggered. Allows the user to configure the system to send an email if certain risk conditions are triggered. Users can also set a reset condition that will also trigger an email. The system runs 24/7, so they will receive an email if there is an issue overnight.

Integration with Major Clearing Firms

Pain Point:

  • Too many systems to track efficiently. Risk managers must use different systems to see the risk of all their traders. The risk manager has to run three different risk systems if their traders execute via three different front ends.

Rival Risk Solution:

  • View real-time and scenario risk across your entire firm regardless of front ends. Our system integrates directly with major clearing firms to pull in start of day position files and real-time trade feeds. Risk managers monitor risk across all of their accounts regardless of the front end or clearing firm. As new accounts created at the clearing firm they show up automatically in the system.

Mobile App Convenience

Pain Point:

  • Tied to a desk monitor. With other systems, risk managers are tied to their desks. If they are outside the office, they cannot monitor their risk. Some of our users employ the Risk Mobile app as their primary application and rarely log in to the main website.

Rival Risk Solution:

  • 24/7 Mobile Access. The Risk Mobile app for iOS and Android allows users to view real-time risk and PNL data from their phones. The mobile app is designed to enable users to quickly sort and filter by account, product category, or symbol, providing a great user experience even when managing many accounts.

Transparency with Traders

Pain Point:

  • Risk managers & Traders using different systems. If traders are using a different system than the risk managers, the traders might not be aware they are approaching or exceeding certain risk limits.

Rival Risk Solution:

  • Permissioned logins. Our system allows each trader or trading group to have a login to monitor their accounts. The traders have access to the same values and functionality as the risk managers so everyone at the firm is on the same page.

Explore Rival Risk and discover why it was Voted Best Risk Solutions Provider by Waters Ranking 2022