The leader in business solutions for the investment management industry, DST International (DSTi) has signed a contract to integrate its comprehensive investment management risk solution, as IAG Asset Management's front office risk management system.
The sophisticated enterprise-wide risk management solution applies consistent methodologies across all asset classes and investment strategies using data that is integrated, validated and consistently cross-referenced for reporting and analysis. It is designed for Discretionary Funds, Hedge Funds, Super Funds, Mastertrusts, Wraps and High Value Wealth Portfolios across all asset classes. Risk measures can be aggregated to any level of the organisation, often revealing hidden and subtle risks.
IAG Asset Management, the asset management arm of Australia's largest general insurance group Insurance Australia Group (IAG) with around $13 billion in funds under management for clients, selected DSTi's Risk Solution following a rigorous selection process for its ability to meet the company's Risk Management and Value at Risk (VaR) requirements.
IAG Asset Management is the second Australian fund manager to select the DSTi's Risk Solution. Suncorp Investment Manager went live with the first implementation in Australia in August 2005.
The contract with IAG Asset Management reflects a growing need for comprehensive investment risk management techniques and solutions as more Australian fund managers recognise the commercial and operational benefits they can deliver, according to DST International Chief Executive Officer for Australia and New Zealand, Mr Ian Mathieson.
"Earlier this year we completed industry research (DSTi Risk in Funds Management Report 2005) and 96% of our survey participants identified that they expected demand to increase for quantitative risk measures over the next four years. A majority also thought that increased reporting of risk will be mandated by legislation, with 57% believing APRA is very likely (24%) or somewhat likely (33%) to force managers to adopt banking-style risk management practices by 2009.
"Issues identified included lack of data, systems and resources as the major obstacles in producing detailed risk measurement capabilities. We are pleased to see that with the second Australian fund manager seeking to resolve the challenge of investment risk management with our risk solution, there is a growing awareness that the adoption of increasingly sophisticated investment processes achieve better outcomes for the funds manager and investor," he said.
The contract to integrate DSTi's risk engine extends the long-standing relationship between DSTi and IAG, which already uses DSTi's HiPortfolio Asset Management solution.
"DSTi is proud to have been chosen to assist IAG Asset Management as they take risk management and integration of value at risk into daily investment management processes to a new level. DSTi's Risk Solution offers an excellent functional fit as a natural extension to HiPortfolio for this valued customer," Mr Mathieson added.