As part of a long-term asset allocation strategy, we strive to achieve a balanced relationship between potential returns and the risk of loss. Risk communication and documentation play an important role in all phases of the risk management process. We use statistical methods to assess capital market trends and identify potential losses. Unnecessary and operational risks are minimized. Excessive investment risks are avoided through consistent management and monitoring. After all, our primary mission is to invest the assets under our fiduciary management prudently and strategically—and to ensure an optimal risk/return profile.

Internationally standardized and meaningful metrics are used to analyze, assess, and manage financial risks. Loss risks are recalculated daily based on volatility and Value-at-Risk (VaR) for individual investments as well as at the portfolio level. Risk concentration in individual securities or asset classes is analyzed using Component Value-at-Risk. Furthermore, backtesting is conducted regularly for the entire portfolio. This is intended to ensure that our risk models are adequately calibrated and deliver meaningful results. Additional stress tests ensure that even extreme market value losses are taken into account in the portfolio’s construction. BONUS obtains the underlying data daily from established market data providers or directly from the fund companies.

Effective risk management as part of portfolio management is only possible if early warning signals and limits are consistently monitored and adhered to. For example, clear investment limits are defined for riskier asset classes, such as stocks, which must not be exceeded. Precise thresholds have also been defined for risk metrics; if these thresholds are exceeded, measures must be taken immediately. At the same time, these limits must be set in such a way that market opportunities can be optimally exploited.