Abhishek Loonker, CFA, Director–investments at Ascent Capital
Message on behalf of CFA Society India
Navneet Munot, CFA
Chairman, CFA Society India
CIO, SBI Funds Management Pvt. Ltd.
Message on behalf of CFA Institute
Managing Director, Asia Pacific
Unexpected Places to Understand Risk
Economist and Journalist, Quartz
Moderator: Sunil Singhania, CFA, Founder of Abakkus Asset Management
What unusual risk takers can teach us about risk in uncertain times? It feels like we face more risk and uncertainty than ever before. Even our traditional tools, low risk bonds aren’t offering the same protection they used to because their yields are so low. The good news is we have strategies that work, but we need to understand them better and employ them in more creative ways. I have collected stories of risk management in unusual places to help us. Some of the stories I’ll share include:
1. What sex workers can tell us about estimating risk premiums and the risk-free rate
- How to know how much risk to take when risk-free gets expensive
2. What celebrity photographers can tell us about diversification
- Deepening our understanding of systematic and idiosyncratic risk in a changing market
3. What big wave surfers can tell us about the benefits and pitfalls of risk management.
- Insurance, hedging and dealing with systemic risk
These stories can enhance our understanding of risk in financial markets, they also help communicate the value of wealth management.
Chairman, Royal Bank of Scotland
Moderator: Navneet Munot, CFA, CIO, SBI Funds Management Pvt. Ltd.
- The re-regulation of traditional financial firms since the crisis has been dramatic. Higher capital ratios for banks and tighter solvency rules for insurers. And there is still pressure for more capital and tighter consumer protection rules. Does this increased regulatory burden risk making conventional financial institutions uncompetitive? The low valuations of banks, especially in Europe, suggest that many investors think so.
- Very low, or even negative interest rates in Europe and North America, are a huge challenge for banks, insurers and investment managers. Are some business models now unviable, when short-term interest rates are negative and the yield curve is flat?
- The fintech resolution is gathering pace. Companies like Ant financial now have hundreds of millions of customers in China. Small fintechs in North America and Europe are eating into profit pools traditionally monopolised by banks and insurers. And the threat from ‘Bigtech’ is even more worrying. Google, Apple, Facebook and Amazon have huge financial resources and millions of customers already and are beginning to add financial services offerings. How should banks respond to these new competitive threats?
Former CIO of Eastspring Investments
Moderator: Aditya Narain, Head – Research, Institutional Equities, Edelweiss Securities Limited
• Discuss some of the key long term themes that are shaping the global asset management industry and its ecosystem
• These trends include technology, demographics, climate change and how these themes combine to support the trend towards sustainability
• Assets managed on an ESG (environmental social governance) basis globally have increased dramatically in the past 15 years. Will they become the norm?
• The speaker will also discuss how portfolio managers can integrate ESG in their portfolios and benefit from an additional source of Alpha for their clients
President and CEO of Valens Research and Chief Investment Strategist of Altimetry
Moderator: Satish Betadpur, CFA, Managing Director, Head of Investments – India, State Street Global Advisors
• Uncovering hidden credit risks (and opportunities) buried in financial statements today
• iCDS: Intrinsic Credit Default Swap for superior credit signals and credit pricing
• Building better bond indices—improving aggregate credit research for macroeconomic analysis
• Current long and short credit ideas from advanced Uniform Credit Analytics
Director of the Center of Adaptive Rationality (ARC), Max Planck Institute for Human Development
Moderator: Madhu Veeraraghavan, Director and T.A. Pai Chair Professor of Finance, T.A. Pai Management Institute
In real life we overwhelmingly deal with situations of uncertainty rather than situations of risk (with risk being situations in which we know possible outcomes of our behaviors and their probabilities). In situations of uncertainty, however, surprises can happen, meaning unexpected / unpredicted events happen. Most of our models, however, including models of risk in investment decisions are models that assumes that probabilities are known or can be reasonably estimated.
In the world of uncertainty, unlike in world of risks, simple strategies—heuristics— perform surprisingly well—in fact they often outperform computationally more complex models
The speaker will illustrate this conjecture
(a) in the world of strategic interactions
(b) in investment decisions (Markowitz’s mean variance model vs. 1/N naive diversification
(c) in investment decisions by laypeople (risk simulator)
(d) across a range of business decisions (e.g., hiatus heuristic).
Finally, the speaker will also point out the limits of heuristic decision making.
Professor of Economics, Stern School of Business, New York University
Moderator: Ridham Desai, Managing Director, Morgan Stanley
While the short-term outlook for advanced economies and emerging markets is mixed, there are longer term economic challenges that most countries face. Roubini argues that we live in a world of change, risks, disruptions and uncertainties that need to be managed properly to ensure global economic prosperity and financial stability.
Country Head, India, CFA Institute