Investment Risk Management

Many firms rely on “off-the-shelf” approaches for risk management and investment analytics. Unfortunately, standardized solutions may not account for the unique complexities of individual investment strategies, potentially overlooking certain risks or not considering opportunities to improve risk-adjusted returns.

 At Allspring, we augment risk management with investment analytics to maintain transparency, rapidly flag and address unintended risks, and pinpoint opportunities for improvement. We believe our approach offers Allspring’s investment teams a nimble, competitive edge over firms that rely on an “off-the-shelf” type of approach.

Complementing expertise with data and analytics

We employ a hybrid risk analytics platform that combines proprietary software and vended risk models into a highly automated risk reporting infrastructure. Our integrated approach marries risk management with investment analytics to monitor each team’s investment process through time, identifying sources of alpha and risk.

 Key functional sub-teams of Investment Analytics

• Equity Risk Analytics
• Multi-Asset-Class Risk Analytics
• Fixed Income Risk Analytics
• Mutual Fund Risk Analytics
• Counterparty Risk Analytics
• Model Validation and Governance
• Portfolio Analytics
• Sustainability Analytics
• Investment Intelligence
• Quantitative Insights and Data Science

A universal question that concerns everyone, from our portfolio managers to our clients, is what is an appropriate level of risk? 

Markets can be affected by many types of risks, and each risk’s impact generally varies over time. The Investment Analytics team is responsible for continuously monitoring known risks, anticipating and identifying new risks, and regularly communicating the results of our analyses to all of Allspring’s investment teams.

A consistent, unbiased framework to risk management

Through our advanced analytical capabilities, we aim to provide a consistent, unbiased framework for evaluating investment risk in each strategy across the firm—all in an effort to help portfolio managers deliver on their objectives for clients.

Capabilities in action: Risk decomposition 

• Provide daily reports using risk models and analytics from industry-leading vendors
• Assist in the identification of significant risks by decomposing exposures into country, currency, style, sector, and security-specific components
• Act as a first step in the process of escalating significant market risks to senior management

Capabilities in action: Integrating sustainability analytics

1. Assess a portfolio’s existing sustainability risk exposures

- Portfolio-level analytics leveraging vended and proprietary sustainability metrics

2. Understand the client’s sustainability objectives

- Sustainability decision framework based on stakeholder objectives

3. Provide analytics, insights, and reporting to facilitate integration of sustainability objectives into portfolios

- Negative/positive screening, ESG integration, thematic investing, and impact investing

Capabilities in action: Escalating risks

Our independent investment oversight process complements each team’s embedded risk management efforts. Overseen by the Office of the CIO, the team regularly administers assessments, reports, and analyses to facilitate a better understanding of intended and unintended investment risks.

When a product experiences extreme performance and triggers daily filters, the Office of the CIO enlists our team to conduct an extensive review of the performance drivers.

Each month, the Allspring Investment Analytics team assembles a list of market risks that it believes could influence investment portfolios and releases findings via the Allview Market Risk Monitor.

The report outlines the top 10 current global market risks, ranked by each risk’s probability of occurring and potential impact on global markets. The list is not exhaustive, but rather a short collection of items that answer the question: “As a risk manager, what keeps you up at night?”

The Allview Market Risk Monitor provides a financial ecosystem that leads to how we invest. Our co-chief investment officers consistently challenge portfolio managers to respond to these views based on their diverse perspectives.