Riskmetrics aims for hedge funds

Peter Davies, recently appointed vice-chairman of New York-based risk management vendor Riskmetrics, has said the alternative investment industry - specifically hedge funds and funds of funds - is an area of focus for the company.

"Of particular focus is the hedge funds, fund of funds and alternative investment business," Davies said. "But whether you want to call that the buy side or not is a matter of debate. Those institutions are more trading-oriented, although they do still operate as buy-side institutions."

Speaking after a three-month sabbatical from the risk management industry - he resigned from Askari, a New York-based specialist risk management systems provider, in June -- Davies said the firm is well placed to service an area of the industry where risk management and transparency are being scrutinised by investors and regulators.

"I think the firm provides some measure of standardisation - metrification if you like - of risk, particularly in the fund of funds area where the investors don't see what the underlying holdings are," Davies told RiskNews' sister publication BuySideIT.

"The industry does not want to be regulated - it wants to show that it has the ability to please itself, and investors are less and less likely to be individuals and more likely to be institutions," Davies added. "Institutions demand greater accountability and transparency than the hedge funds have traditionally provided, and I think there is pressure to define appropriate transparency and standards of risk management and disclosure."

Davies' appointment carried no specific remit with regard to his areas of focus, but he said it was in response to the firm's growth and also the escalation in demand for its services.

Riskmetrics has a number of areas of specialisation, including market and credit risk, data, hedge funds, high-net-worth individuals, pension funds and research. However, Davies' new role will be firm-wide, as opposed to managing one of the firm's core competencies.

Davies founded Askari in 1992. The firm was sold to Boston-based State Street Bank in 1998, but he continued to serve as the firm's chief executive. Prior to Askari, Davies founded Sailfish Systems, a developer of firm-wide risk management solutions for banks.

His interest in multi-market risk measurement developed over the course of an 11-year career in the financial services industry, working for such firms as Swiss Bank Corp, Bankers Trust and Merrill Lynch's International Bank Group.