Treasury Leaders SummitTreasury Innovator Award winner: CheckRisk

Treasury Innovator Award winner: CheckRisk

At last week's Treasury Leaders Summit, risk assessment platform CheckRisk was declared winner of the Treasury Innovator Award. We spoke to chairman and founder Nick Bullman.

CheckRisk provides risk services to more than £70bn of risk assets globally. Its team of investment professionals has decades of combined experience within asset management, trading and qualitative/quantitative modeling disciplines. Its consulting services, risk models and commentaries are designed to provide a high level of value to any firm that is interested in having an independent view to aid decision making, formulate risk strategies, to put in place risk management systems or manage assets. Its work with the University of Bath, School of Management, and University of Bristol, Systems Engineering Department, means that investors wishing to understand risk have the backing of top level academic institutions and the pragmatic investment risk skills of CheckRisk’s team.

How did the idea about your service originate?

Risk is essentially about two fundamental things: situational awareness and being paid to take a risk or not. CheckRisk calls this Risk, Rewarded. CheckRisk imagined being able to see the complexity of a treasurer’s counterparty risk exposure in terms of a simple visual matrix. As a result, CheckRisk BankFox was born.

CheckRisk BankFox was developed as a reaction to the fallout of the Credit Crisis of 2008 which revealed deep flaws in traditional risk monitoring systems. The most important systemic risk of all; Network Counterparty Risk. The problem is that treasurers are unable to see the links across their breadth of counterparties, thus efficient diversification is a problem. How can you tell if the counterparties you are working with are differentiated unless you can view them in a network? Working closely with the University of Bath, School of Management, and the University of Bristol, Systems Engineering Department, CheckRisk set about creating CheckRisk BankFox, an advanced network risk model which provides all of the data that a corporate treasure needs to create, manage and optimise counterparty portfolios. BankFox allows for scenario analysis and stress testing as well as portfolio optimisation.

The service originated as part of a consulting project that CheckRisk carried out on behalf of AEGON (Ireland) as part of a review of their treasury risk management process.

What is your customer base?

CheckRisk’s customer base includes insurance companies, banks, a European Central Bank, pension funds, a pension fund adviser, a top rank University Endowment, a private wealth management company and a family office. CheckRisk advises on over £80bn of risk assets globally. CheckRisk has a diverse group of clients using the multiple risk models we have developed with our academic partners. These models range from Early Warning Risk Systems to Individual Risk Profiling tools and our Network Risk Modelling capacity. The single uniting factor amongst our client base is a desire to gain situational awareness and to be able to better price risk.

What differentiates you from your competitors?

CheckRisk is a risktech firm that is independent, conflict free, and focused solely on developing cutting edge risk models through our academic partnerships and industry know-how. The purpose is to assist our client base in managing risk so that they can both profit from correct risk decisions and avoid losses too by understanding the pricing of risk often via visual models that are based in cutting edge behavioural science CheckRisk has designed models that are easily used to provide solutions for complex situations. We believe that liquidity risk is one of the major risks facing a corporate treasurer and so BankFox focus’ on both individual counterparty risks via our proprietary Distance to Default Metric and also considers the impact in a network environment.

CheckRisk understands that BankFox needs to work within an existing framework and so our outputs can provide more traditional probability of defaults so that the treasury function is comparing like for like.
The combination of leading academic partnerships, risktech innovation and industry knowledge to produce products that matter for our clients and society in general differentiates CheckRisk BankFox. CheckRisk believes that investing for return and then calculating the risk is putting the proverbial cart before the horse. Investing for Risk is a safer, more efficient and ultimately better way to ensure our clients expectations are met.

How does your product make treasurers’ lives easier?

BankFox’s optimisation module means that treasurers can dial up or dial down risk in their portfolios according to their own risk profile. Whether that is based on liquidity preferences, Value at Risk, or other internal parameters. In short BankFox will maximise the return for any given risk profile thus enhancing the profitability of a treasurer’s portfolio.

BankFox is an easy to use software as a service (SAAS) product that assists treasurers on multiple levels:

  • Visual Representations of Network interconnectivity
  • Early warning of Global or Regional Risk changes
  • Identification of counterparties with similar business characteristics (diversification profiling)
  • Enhances treasurer’s ability to price risk versus return
  • Ability to create portfolios and conduct scenario and stress test analysis prior to execution
  • Scenario and Stress Testing of the impact of systemic institutional failures outside your network
  • Regulatory and Board Reporting in easy to understand visual and tabular formats

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