AFTAs 2019: Best Risk Management Initiative—Charles Schwab Investment Management


Charles Schwab Investment Management’s (CSIM’s) investment risk team wins this year’s AFTA for supporting the business in managing risk across its portfolio and liquidity regulation functions, taking the title from the 2018 winner, Barclays Investment Bank. CSIM’s team provides users with access to a range of risk scenarios to identify factor exposures and improve collaboration between risk analysts and portfolio managers. It also allows the firm to manage its liquidity requirements so that redemptions do not have a big impact on remaining investors.

Schwab, a provider of passive index funds, has doubled assets under management since 2011 to over $430 billion in mid-2019. As the business has grown, its exposures grew too, says James Ferrarelli, vice president and head of asset management technology at the firm, and recipient of the best technology executive (buy side) in the 2018 AFTAs. “When you look across all the debt, all the equity you own in multiple funds … you are having to make sure that your exposure to one particular company or sector is managed appropriately and within regulatory guidelines. How are you going to manage all the inflows and outflows as markets move in the best interests of investors,” Ferrarelli says. “This is what this team has been able to deliver to our business—from the automation of the calculations, the benchmarks we are using and the data to measure the risk, how we are reporting that risk, how it goes to the board of directors for their sign-off and through the liquidity risk program that we have created to monitor that. This is what the technology is supporting.”

“The investment risk team provides access to users across multiple vendor risk engines, which enables CSIM users to directly benefit from investments that vendors are making in cutting-edge technology like artificial intelligence,” says Manish Ghayalod, senior managing director and head of CSIM investments technology.

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