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In Conversation with Peter Cripwell (Risk System)

Risk System’s Peter Cripwell talks to Des O’Donohoe about, what else, risk.

Watch the video to hear Peter talk about the dangers of relying on excel, the risks around accuracy and error and mitigating risks under AIFMD obligations. 

In Conversation with Peter Cripwell (Risk System)

Hosted by Des O'Donohoe

Video Transcription

Des O'Donohoe: Hi, everyone. Des O Donohoe from Fund Recs here again, and today I have Mr Peter Cripwell from RiskSystem. Peter, how are you?

Peter Cripwell: I'm very well thank you, and how are you Des?

Des O'Donohoe: I'm good. Christmas is nearly upon us. So, RiskSystem. What do you guys do?

Peter Cripwell: Well, basically we provide risk management, infrastructure and data infrastructure, and services to the fund management industry. What that means is that we are actually able to produce the appropriate risk information to almost every layer of the fund management tier, as it were. In other words, if you're on the board and you want to have timely, but extremely precise reports, we can provide that. If you're a risk manager, we can provide you with daily or hourly - if you require - reports on the actual risks that have been running, and they can be very much designed so that you get the reports that you want when you want them.

Des O'Donohoe: Okay. So you guys effectively replace all the clunky Excel reports?

Peter Cripwell: As we like to say, our biggest competitor is Bill Gates because frankly, the world runs on Excel, which is... to be honest, if you're small and you are nimble, might be all right, but anyone who's got any amount of money knows that it is extremely dangerous to actually rely on Excel. A) you can overwrite cells that you need, B) you can lose the spreadsheet, and C) if you're in one place and your spreadsheet's in another, you're dead. So what we try and do is give all of the functionality that you may want in a spreadsheet. In fact, you tell us what functionality you want, we'll build it for you. And then we deliver it on a web-based interface, or on PDFs, or we email you, or we'll even text you if you want to know stuff. So what we try to do is take what was a very fragile, difficult to use resource and we replace it with one which is absolutely trivial to use, but one which you've designed yourself so that you get the solution you want.

Des O'Donohoe: And where did you guys come up with this? Or how did you stumble upon this, are you from the industry initially?

Peter Cripwell: I've been writing risk management systems for about 20+ years. I started off in Salomon Brothers and there I wrote... It was Lotus, if anyone can remember Lotus. A Lotus risk management system for the trading desk. Then when I was in Pioneer, I was the Chief Investment Officer and used VBA and Excel and Access. Nightmare, every one of them! I wrote a risk management tool, which allowed us to monitor the risk of all of the... We had seven funds on the platform. And then I was working for an online trader called Delta Index. And it came slowly, all of the horrible things I was doing could now be done properly. In other words, cloud-based databases actually worked. Time series data, you didn't actually have to use an API to get it. Web-based screens, you could deliver all of this functionality easily and anywhere, and you could all fit it together. And it was a revelation.

Des O'Donohoe: What are the biggest challenges that you see your current clients facing? Even with you guys onboard or without you guys board, what is the key thing? One thing I noticed in the marketplace at the moment is the amount of regulation, it just seems to be ever-increasing. Do you think there's any fear of it killing the marketplace or do you think there's ways and means of dealing with it?

Peter Cripwell: I think regulation... it has certainly increased dramatically since the crash in 2007 to 2008, no doubt about that. In some respects, to be honest, it was needed because I think you could blame some of the crash on it. It's undoubtedly swinging towards too much, but I don't see the actual regulatory environment going back anytime soon. I think the memory of the horror of what happened is still there. But I think what this means for our clients is that they have to have the tools to manage that regulatory burden. And one of the things we like to tell our clients is, because we manage all of their risks, creating regulatory reporting for us is fairly trivial. So, any of the stuff that they need, whether it be Annex IV reporting, financial derivative instruments for UCITS... And in fact, the recent PRIIPs legislation has meant you've now got to do strange things called bar-estimated volatility. All of this stuff is a press of a button for us, so that we can provide this to our clients as and when they need it.

Des O'Donohoe: Well, it's interesting you mention that because at Fund Recs, our clients are constantly saying "Can you do this report? Can you do that report?", and the development team is always saying to me "Des, it's like this: if the information is in the system, we can give it back in whatever format the user needs to have it in." And I definitely think the user doesn't realise how easy it is once the data has come in. Would you guys find that to be?

Peter Cripwell: I think that's absolutely the truth. One of our business lines is actually selling our clients back their data. One of the things we do, and I'm sure it's the same with you with you folks, is we actually create a clean, normalized data set. So in other words, all of the information that we hold for our clients, firstly, it's right. So there's no messing around with whether or not the positions are backwards as is often the case, or you've got different signs or different indicative data. Our data is correct. And secondly, we archive it on an ongoing basis. So it's very easy to access. So part of what we do for our clients, for example, when we are providing clients with attribution analysis, we have all of their data, multiplying it by a few numbers and doing the Forex right isn't that difficult, but it means that we can give them back the information they require. Fact sheets: again, once you've decided on the layout of your fact sheet, it's just a matter of pressing a button and out it comes. And it comes out within 24 hours of us getting the data.

Des O'Donohoe: Lovely. Last question I would like to ask you. So we're at the end of 2017. 2018, what's on the horizon for you guys, either technically or regulatory, that you guys are looking at?

Peter Cripwell: From a technical perspective, what we're looking at is really just trying to actually make certain that our business can scale, so it can handle the actual numbers of clients and transactions that we're seeing. But I think the big issue is the fact that as regulation becomes more burdensome, the cost of actually managing that regulation becomes higher, and solutions that offer you a better priced result in terms of dealing with all of that regulatory burden become a lot more interesting for the clients.

Des O'Donohoe: Very good. Peter, an absolute pleasure having you in today. Thank you very much.

Peter Cripwell: Des, that you very much, indeed.

Des O'Donohoe: Cheers.

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