ASI and Centre for Risk Studies collaboration.

Private Markets portfolios and real world risks collaboration

17 June 2020

The article at a glance

Aberdeen Standard Investments’ (ASI) Private Markets Solutions team and the Centre for Risk Studies announce a strategic collaboration. In order to deal …

Aberdeen Standard Investments’ (ASI) Private Markets Solutions team and the Centre for Risk Studies announce a strategic collaboration.

In order to deal with the complex and opaque nature of investing in Private Markets, Aberdeen Standard Investments has developed a Private Investment Sensitivity Model (“PRISM”). This will initially be a tool in the management of ASI’s flagship Global Private Markets Fund. Integration with the Centre for Risk Studies’s substantial library of scenarios built upon the the Science in Scenarios™ platform will provide quantified views from a wide array of real world risks.

PRISM analyses the components of performance drivers for the assets in the portfolio, including global macro, markets specific and idiosyncratic factors. It draws from and utilises specific data points from each investment to assess future exposures and expected performance of investments – private equity and debt, infrastructure and real estate – that have long term horizons and are notionally illiquid.

Nalaka De Silva, Head of Private Market Solutions said: “As Private Markets become an increasingly material part of client portfolios, portfolio construction and risk management must be at the centre of the investment process. Given the complex impact of COVID-19, a deeper understanding of portfolio risk is more important than ever. We are very excited about building on our framework with the team at the Centre for Risk Studies and sharing the insights it generates with our clients.”

By adding real-world scenario capability to the PRISM framework via the collaboration with the Centre for Risk Studies, PRISM will seek to quantify the effects of a wide variety of potential and emerging risks on a portfolio. The Centre for Risk Studies’s scenario suite provides industry standard stress tests covering a selection of threats from a structured taxonomy of business risks. The Centre’s scenarios have been established from extensive research to assess and quantify potential emerging threats that could arise from financial, geopolitical and technological risks along with those that stem environmental, social and governance considerations.

Andrew Coburn.
Dr Andrew Coburn

Dr Andrew Coburn, Chief Scientist at the Centre for Risk Studies, Cambridge commented: “This collaboration allows for the interaction and analysis of our own risk research with portfolios of private markets assets from a global asset manager. This is a unique and valuable insight and we look forward to working with ASI.”

Campbell Fleming, Global Head of Distribution at ASI said: “Our clients want and expect data driven analysis similar to what they already receive for their public market investments and also for us to leverage our research capabilities hold to better inform investment decisions. We believe that PRISM will not only be an important tool for us to use across our Private Markets portfolios. Ultimately pension funds, insurers and sovereign wealth funds could employ to assess and monitor their Private Market investments.”