Audit and Risk Control of investment portfolios

It’s no use crying over spilt milk, when the crisis is already here, its time to act…

In the financial sphere, potential risk means potential financial losses. However, the more we know about risk, the better we can be at evaluate the dangers in advance and hopefully prevent them from happening, thereby avoiding loss. Post factum, we can only lick our wounds and count our losses.

When we reach that time in our lives when we are ready to invest, we most likely ask ourselves:

The questions you most likely ask yourself before making an investment decision……

  • Does my earning capacity equate with the level of risk that I am taking? Is it worth risking 50% of my capital for a potential gain of only 10% per annum?

  • What real risk is involved in my investment? How should I manage it? How can I reduce it?

  • What would happen, if 2008 came around again? Do I know how my investment will behave in a crisis situations? Or do I close my eyes and pray?

  • How do I know if something is wrong in my investment strategy? How do I assess my choices?

  • How do I correct my investment strategy if it is not right for the current market? I need a reliable opinion.

CONFIDERI delivers simple and reliable services in independent risk control and risk-based audit of investment portfolios.

We are focused on providing clarity on the capital investments of our Clients. We highlight real risks, carry-out comprehensive and consistent analysis of security holdings, and conduct follow-up risk control during the whole investment period.

An independent evaluation for an investment portfolio is the most important instrument that can be used to control risk and provide an accurate measurement of potential risk scenarios.

Contrary to common belief, auditing is not just fact-checking intended to find a flaw. It is rigorous search, analysis and in-depth cooperation with financial specialists, to optimize the performance of the investment portfolio.

There are two types of risk audit (risk assessment), which complement one another - qualitative and quantitative.

Qualitative analysis uses a methodical approach to quantitative ratings of acceptable level of risk.

Quantitative rating involves a numerical definition of particular exposures and risks of portfolio, and it is generally based on methods of compiling statistics. It is sometimes challenging to apply this method because of poor or inaccessible statistical data.

Qualitative analysis consists of several steps:

  • determining factors that affect (increase or decrease) particular risks. Further risk analysis will be based on whether this level within acceptable bounds or not;

  • selecting a risk assessment rating system, that will assess the adequacy, complexity, responsiveness, objectivity requirements and allow expansion of the data;

  • determination of a risk sensitive area: determination of any actions, manipulations, transactions that will lead to an uncertain positive result;

  • identification of all possible risks which may arise out of certain acts or omissions.

Analysis of data is the most important step in establishment of risk management, at the preliminary stage. Therefore all risk factors that may be classified by different criteria and attributes (like incidence, risk impact, controllability, source etc.) are determined.

Risk management process can be split into six clear sequential steps:

  1. Task definition

  2. Risk revealing

  3. Risk assessment

  4. Selection of risk management option

  5. Managing control

  6. Summary.

CONFIDERI deals with all types of risk control and investment portfolio audit and will become your trustworthy partner on the way towards reducing your investment risk.