Do UnRiskers unrisk?
Yes, but not in the sense of removing risk blindly. It's about how to make danger and opportunities a positive contribution…always in the regulatory framework.
UnRiskers know that there's optimal risk and they know that diversification does not always work and they also know that other "deterministic" optimizers, like the Kelly Criterion, need some deeper analysis.
And they know that hedging becomes even more difficult if more info of the individual market environment is known. To unrisk might require reducing sensitivity or volumes - but that are often conflicting objectives.
What investment and risk mangers enjoy using UnRisk: getting insight by comprehensive scenario analysis...the ability to shift multiple market and risk factors simultaneously…some predefined and automated, like in the UnRisk VaR Universe.
The robust UnRisk Engines deliver the values, risk spectra, cash flows...blazingly fast, delivering results of the required massive valuations in time. Portfolio across scenario simulations are performed automatically, inherently parallel...
The complex new regulatory regimes of central counter party and central clearing require the massive calculation of value adjustments, capital storage requirements (CVA/DVA/FVA…KVA), initial margin…UnRisk Exposure Engines need much more portfolios scenarios…
You may end up in multimillion single valuations to get support for a few decisions.
A bigger picture of risk
To understand the possible butterfly effects of, say, regulatory regimes you need quantitative treatment to a maximum extent…many results that can be aggregated, evaluated, visualized...
It's what UnRisk has in mimd: to unrisk...get a bigger picture of risk - not just remove it.
When the regime changes you need to unlearn, because the rules of risk management have changed. And your quant finance system need to manage the change.
Understanding risk you need to understand money, duality, boundaries and optimization.
The controlling idea behind "unrisk"
Our abstract concept is quite simple: nested instrument groups and scenario groups moving over time with events…That empowers structuring, portfolio, scenario and test building.
To unrisk means understanding the sensitivities of all relevant factors and optimizing risk in regimes where the "conditions" are known and relatively safe and remaining dangers are cleared out.
To unrisk means also to analyze the tail risk…calculate expected shortfalls, apply power laws to get distributions...
There's no such word in the dictionaries…but it got a kind of operational semantics by using UnRisk.
UnRiskers unrisk, as UnMarketers unmarket…
It was risky, when we decided for trademarking UnRisk, 2001. 5 mathematicians sat together deciding. The owner, the CEO, the product manager, the key developer and myself (business developer). It wasn't me, who proposed it...but I knew immediately: it will contribute to a changed view into risk. A mathematical view.
It took me 14 years to understand that unrisk also means the thrilling story of managing risk by UnRisk.