ALGO RISK SERVICE

GET CONNECTED TO AN OUTSOURCED, WEB-BASED SERVICE WITH UNMATCHED INSTRUMENT COVERAGE FOR THE BUY SIDE.

LEADING-EDGE RISK AND PORTFOLIO ANALYTICS, CONFIGURED TO THE UNIQUE NEEDS OF YOUR INVESTMENT UNIVERSE.

Algo Risk Service is a web-based portfolio construction and risk management service designed for buy-side organizations, trading desks, and corporate treasuries. Hosted by Algorithmics and delivered online, the service provides access to sophisticated risk management and investment support tools, without the data, personnel, and hardware costs of maintaining an in-house deployment. As a managed service, Algo Risk Service provides a dedicated data and production environment, delivered online, which is uniquely configured to address each clients specific business requirements. All data management, model configuration, and application support is provided by a dedicated Algorithmics team of client engagement specialists.

ALGO RISK SERVICE OFFERS:

Unrivalled Coverage
Drawing upon Algorithmics 20 years of experience and investment in financial engineering, Algo Risk Service offers industry-leading coverage across risk factors, asset classes, and investment strategies within a simulation framework based on full-forward valuation. The service provides an extensive range of portfolio analytics, risk measures, valuation models, and optimization techniques, calculated on both an absolute and relative basis, thereby covering all of an organizations long-only and long-short investment strategies in a single, theoretically-consistent manner.

Superior Flexibility
Algo Risk Service offers organizations the flexibility to choose the analytic measures, valuation models, market data, and reporting options most appropriate to their unique risk and portfolio construction requirements. Unlike standard ASP approaches, the managed service provides each organization with a dedicated production environment, implementation team, and relationship manager, thereby offering the level of data and configuration flexibility normally associated with an in-house implementation.

Advanced Usability
Algo Risk Service provides access to interactive diagnosis, what-if capability, drill down, and attribution analysis across a virtually unlimited range of risk factor and grouping dimensions, going far beyond the provision of static risk reports. Through its intuitive navigation and a dynamic, highly interactive user interface, the service helps organizations acquire on-demand access to inquiries. From portfolio managers to risk managers, individual users within an organization can organize the workbench environment to meet their own unique analytical and ergonomic needs. All functionalities, tools and reporting templates can be surfaced or hidden depending on the specific task at hand.

Exposure report e.g., for a long-short strategy, shows interactive concentration analysis

Award-winning risk technology

Judges chose Algo Risk Service as the Best Buy-Side Risk/Portfolio Analytics Product in the 2008 Buy-Side Technology Awards. Their unanimous decision took into account the breadth of Algo Risk Service's asset coverage, flexibility, usability, and testimonials from clients.

FEATURES AND BENEFITS

Algo Risk Service integrates front- and middle-office requirements to help provide a consistent view of risk throughout the organization. All risk analytics and portfolio construction capabilities leverage a single simulation environment, while the configurable interface supports the workflow needs of multiple groups with key functional and service-based advantages.

Interest rate report e.g., shows desk level portfolio analytics, contribution measures

Tracking error report e.g., shows what-if risk and return relative to a benchmark

KEY FUNCTIONAL ADVANTAGES INCLUDE:

Comprehensive investment strategy support
Algo Risk Service supports all long-short and long-only investment strategies, spanning any real or virtual portfolio structure. Risk and return measures can be calculated on an absolute basis or with respect to a portfolios active exposure, relative to multiple standard or user-defined benchmarks.

Extensive risk analytics

Algo Risk Service offers an extensive array of analytical and simulation-based risk methodologies, including key-rate, beta and sensitivity measures; user-defined stress testing and event analysis; and distributional measures such as VaR, tracking error, and expected tail loss.

Flexible risk diagnostics

All risk measures are calculated at the enterprise and portfolio levels with full drill down to the individual security level, or to the level of any user-defined group, including asset class, currency, industry sector, issuer, credit rating, P/E ratio, and duration bucket.

Thorough risk identification

Algo Risk Service calculates portfolio or security risk measures on both a stand-alone basis or with respect to their contribution to parent level portfolios, while also providing full risk decomposition by criteria such as risk factor attribution and asset allocation vs. security selection.

Proven portfolio modeling tools

Algo Risk Service supports an interactive portfolio construction workbench with a wide range of portfolio modeling tools, which enable the comparison of potential investment strategies. The toolset includes what-if analyses, best hedges, portfolio optimization, portfolio replication, and efficient frontier analysis.

Optimization workbench e.g., efficient frontier portfolios of return against tracking error

KEY SERVICE ADVANTAGES INCLUDE:

Stringent service levels
Algo Risk Service provides precise service level agreements (SLA) that exceed industry standards, ensure reliable uptime commitments, and guarantee rapid response times. The SLAs provide a clearly defined change request process and offer transparent service escalation procedures.

Robust data management

Through well-defined data retrieval processes and data validation procedures, Algo Risk Service provides a robust data management framework where data is processed, monitored, and validated each time data is retrieved. Analytical testing, statistical analysis, and screening techniques are used to ensure that day-over-day valuation deviations are reasonably bounded.

Client data security

Each Algo Risk Service client is assigned its own secure production data environment, ensuring that no misappropriation of client data takes place. In addition to isolating and securing all of a client's input and result data, transfers to and from the production center are encrypted to further protect data security.

Financial engineering and model validation support

As the basis for its risk and portfolio analytics, Algo Risk Service provides model-based valuations and analytic sensitivities across all asset classes, including complex derivatives and structured products, which are modeled and validated by Algorithmics' financial engineers to ensure accuracy and consistency.

Multiple market data options

Algo Risk Service produces valuations, risk measures, and portfolio analytics based on a standard market data offering that may be augmented or replaced with a client's proprietary data, or through data loaders that seamlessly support other third-party market data providers via an agency arrangement.

Value at risk report e.g., shows VaR, VaR attribution and VaR contribution across portfolios

WHO BENEFITS FROM ALGO RISK SERVICE?

Algo Risk Service addresses the requirements of both the front and middle offices by leveraging a single, integrated risk framework. Designed to simultaneously meet the needs of risk managers, portfolio managers, traders, and quantitative analysts, Algo Risk Service provides a robust risk management and portfolio construction environment to monitor, manage, and optimize risk across all asset classes and investment strategies.

Traders
Algo Risk Service provides traders with the tools to evaluate the tactical implementation of a portfolio strategy. Traders gain access to functionality that provides impact analysis of possible trades, extensive what-if functionality, limit monitoring, risk measures at the position, portfolio or group level, and the ability to put in place effective hedging strategies to mitigate risk.

Portfolio Managers
Algo Risk Service provides an interactive strategy workbench for risk assessment and portfolio construction purposes. This workflow environment enables portfolio managers to efficiently and transparently embed risk into the core of their investment and risk budgeting process with extensive optimization and what-if functionality to maximize risk-adjusted performance.

Risk Managers
Algo Risk Service enables risk managers to assess the risk of an individual portfolio or the consolidated risk of multiple portfolios and/or portfolio hierarchies across the organization. The underlying scenario-based methodology provides multiple risk perspectives across all risk factors, asset classes, and investment strategies, resulting in a robust, consistent, and meaningful view of risk exposure.

Stress test e.g., replays market events occurring during the Asian crisis on todays holdings

About Algorithmics

www.algorithmics.com

2008 Algorithmics Incorporated. All rights reserved. ALGO, ALGORITHMICS, AI & Design, ALGORITHMICS AI & Design, KNOW YOUR RISK, MARK-TO-FUTURE, RISKWATCH, ALGO CAPITAL, ALGO COLLATERAL, ALGO CREDIT, ALGO MARKET, ALGO OPVANTAGE, ALGO OPVANTAGE FIRST, ALGO RISK, ALGO RISK SERVICE, and ALGO SUITE are trademarks of Algorithmics Trademarks LLC.
SOL-AR-0011 (1 11/08)