Risk Management Principles

Systematic approach to risk

The life is so much easier when you deeply understand the common truths: We can’t affect what we don’t control. We can only embrace what we don’t control and handle properly our risks. Additionally, there are “unknown unknowns” or “black swans” which are virtually impossible to account for.

What we control:

• Allocation rules and rebalancing thresholds
• Maximum position sizes and concentration limits
• Transaction costs through optimized execution
• Leverage (borrowing) constraints and deleveraging triggers

What we don’t control:

• Market direction or timing
• Individual asset selection beyond core holdings
• Short-term volatility (we expect and plan for it)
• Protocol hacks

Risk metrics and monitoring

We run sophisticated dashboards and visualise client portfolios and their performance and risk metrics. Here are some of the factors we pay our close attention to:

Daily VaR: Portfolio value-at-risk calculated and monitored
Correlation Tracking: Automatic adjustment when asset correlations spike
Liquidity Buffers: Minimum cash reserves for redemptions
Circuit Breakers: Automatic pausing during extreme market events