The Management Board considers that a key factor of AIFM’s ability to create sustainable value is the risks that AIFM is willing to take and its ability to manage them effectively. Many risks exist in the Funds’ operating environment and continuously emerge on a day to day basis. The overarching principle is not to take risks that would threaten the Fund’s ability to achieve its overall business strategy. Risk Management Function activities do not aim at eliminating them except operational risks, as that would simultaneously eliminate all chances of rewards and opportunities. The Risk Management Function and Compliance Function is instead focused at ensuring that these risks are known and addressed through a pragmatic and effective risk management process. In general all operative risks shall be minimized and only those business risks which are reasonably quantifiable and manageable will be taken. The risk management process for the Fund foresees the following main parts:
- Proper governance
- Risk identification (whereas the main risk categories are market risks, liquidity risks, counterparty and credit risks, operational risks, legal and compliance risks, AIF specific risks and real estate specific risks)
- Risk measurement
- Risk management and mitigation
- Risk reporting
The Management Company provides the following risk management services to the Fund in internal control and risk management framework:
- establish a risk management policy and ensure the risk management function in respect of the Fund;
- identify risks on an on-going basis;
- employ techniques in monitoring and controlling among others market, credit, counterparty and operational risk;
- monitor and manage the Fund’s liquidity risks and ensure that the liquidity profile of the Fund complies with its underlying obligations
- implement the necessary risk controls and perform all relevant ancillary functions;
- adopt and implement adequate risk management systems, arrangements, processes and techniques in order to identify, measure, monitor and manage appropriately all risks relevant to the Fund’s investment strategy and to which the Fund is or may be exposed;
- implement an appropriate, documented and regularly updated due diligence process according to the investment strategy, the objectives and risk profile of the Fund;
- maintain the procedures to combat money laundering
- ensure that the risks associated with each material investment position of the Fund and their overall effect on the Fund’s portfolio can be properly identified, measured, managed and monitored on an on-going basis, including through the use of appropriate stress testing procedures;
- ensure that the risk profile of the Fund corresponds with the investment strategies and objectives of the Fund; and
- maintain leverage limits in respect of the Fund.