How Asset Owners Can Leverage Automation to Improve Exposure Mitigation

September 13, 2023

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Data-driven automation is helping to transform industries as diverse as manufacturing, retail, and logistics. Financial institutions are also benefiting from automation, not least when it comes to algorithmic trading. However, there are areas of the sector that have yet to benefit fully from the opportunities automation can offer. Exposure management for asset owners is a case in point. 

Asset owners continue to use error-prone manual approaches to exposure management, which makes it difficult for them to keep pace with increasingly volatile markets. Software innovation can help by rapidly surfacing exposure insights from the increasing volumes of data organizations have to handle. In this blog, we look at how these insights can fuel action by leveraging the power of automation. 

Navigating exposure challenges

When it comes to exposure mitigation, timeliness is key to success. In today’s market that means being able to react almost as soon as impactful market data hits the newsfeeds. Real-time monitoring is a vital component of exposure mitigation, enabling effective investment allocations, portfolio rebalancing, hedging strategies, and risk mitigation.

The capability is also key to regulatory reporting. Real-time monitoring enables asset owners to monitor their exposure levels, assess compliance with regulatory thresholds, and generate timely reports to meet regulatory obligations.

Today, relying on spreadsheets and their analyst teams alone, most asset owners are unable to achieve reliable real-time monitoring. Fortunately, new software-enabled workflows promise to address this unmet need with automated exposure mitigation capabilities.

The starting point is, of course, surfacing insights into exposures, and we looked at how software can enable this use case in the previous blog. The next step is to act on what the data tells you. Here, automated capabilities are a must, as they can make asset allocation and rebalancing faster and more efficient. Rimes’ own investment intelligence solutions support firms’ algorithms and instructions within automated allocation models. 

Embracing market dynamics with automation

The best solutions ensure the timeliness of exposure mitigations with intraday indexation supported through the classification and alignment of derivatives and overlay accounts. With Rimes’ Matrix Investment Management platform, for instance, asset owners can create an IBOR that solves for intraday trading and market movement. 

Software-enabled workflows can also meet firms’ needs around timely regulatory compliance. For instance, the Rimes platform ensures the fast and accurate delivery of information, analysis, and reporting to help firms keep pace with the fast-changing regulatory environment. We empower asset owners with the ability to analyze multiple datasets vertically and horizontally, looking through relationships to reveal the data required to meet their reporting requirements.

Asset owners face a very different world today than they have been used to. Every market is potentially volatile, and firms must do more than ever to stay abreast of market movements, understand their exposures, and act fast when required. Software-driven automation can help them do just that. It’s time to down those spreadsheets once and for all and embrace an approach to exposure management that’s fit for our fast-paced digital age. 

Explore Matrix Investment Management further or Contact us to find out about Rimes data solutions.

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