Lind Capital Annual Report 2021 - Flipbook - Side 19
RISK MANAGEMENT
In recent years Lind Capital has experienced significant growth both in turnover and the overall
BUSINESS RISK
level of complexity of our business setup, which
in turn requires an even greater focus on risk
Business risks pertain to the sustainability of our
our general risk appetite towards market fluctuation
management. Consequently, we are in the pro-
business strategy. We continuously work to identify
very low. This is also the case for all residual risks
cess of moving our risk management setup from
the impact of potential trades on the overall portfo-
such as currency risk and interest rate risk.
a day-to-day operation to a strategic level. Risk
lio’s risk and evaluate the impact of concentration
management will therefore, to an even higher
and volatility risk on profitability.
degree than before, be an essential strategic
enabler in taking Lind Capital to the next level.
LIQUIDITY RISKS
Compliance risks examine the changes in our external environment which we cannot directly affect,
We continuously ensure that our actions reflect
our risk profile, which in practice means identi-
Liquidity risk is the risk of not having sufficient cap-
but we need to have contingencies in place for. For
fying, evaluating, and overseeing possible risks
ital available to operate. We have incorporated a
instance, not being on the forefront regarding regu-
distinctive to our surroundings. Due to the nature
range of models that simulate our liquidity needs in
latory changes could either lead to us becoming a
of our business, these risks especially pertain to
various stress scenarios. We do this to ensure that
regulated company or lead to us facing significant
trading-related market risks as well as liquidity
we are prepared and still able to operate if lightning
fines for not being diligent. In the latter case espe-
risk, operational risks, credit risks, business risk
strikes. The single most important thing to us is that
cially Market Abuse and General Data Protection
and compliance risks. It is critical we continuous-
we never miss a margin call, and sufficient liquidity
(GDPR) is in focus.
ly review and manage these risk factors, as this
risk management ensures this.
is essential to ensuring the continued success of
our unique platform. In practice, it also promotes
an increase in our risk-adjusted return and en-
CREDIT RISKS
OPERATIONAL RISK
Operational risks arise from the potential loss that
sures that we remain operative and solvent.
We operate on relatively low margins and work with
may occur because of inadequate or failed internal
On an operational level, we have, as part of our
very large prime brokers. As a result, it is essential
processes. Most of our operational risks are concen-
risk management efforts, established guide-
that we balance our credit risk towards these pri-
trated around IT-related issues, seeing as a potential
lines and procedures that clearly specify how
me brokers as well as all major international banks.
outage, whether originating from internet, software
we handle relevant identified risk parameters.
Moreover, a high level of credit risk management
or hardware failure will have major implications on
These actions have in turn been aligned with our
ensures that we can remain operational, even if we
our operations. Seeing as most of our software is
pre-defined risk appetite. Our guidelines have
endure severe stress tests.
developed internally to fit our needs, some of these
risks have already been mitigated. Our systems have
been approved by the Board of Directors, and
thus include specific predetermined criteria that
define exactly when and why we require extraor-
MARKET RISK
also been developed so they allow for continuous
and instantaneous monitoring of their performance,
which enables us to identify possible downtimes in-
dinary board communication.
We want our performance to be an outcome of our
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COMPLIANCE RISK
On the right, we briefly go through our main risk
alpha generating strategies and our view on specific
sources, and what risk management means to us
factors and imbalances - not an outcome of general
in these different contexts.
market performance. Therefore, we strive to keep
stantaneously.
LIND CAPITAL ANNUAL REPORT 2020
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