Risk management is most certainly the core element of our operation, and is based on three principles.
- Identify means to deal with the risk linked to the principle strategy for the fund while systematically handling all other types of risks.
- Quantify, from the initiation point of a position the amount of the maximum principle risk.
- Manage the risk by using a strict management system with limits and a Stop Loss.
As an example, for the Laffitte Risk arbitrage fund, the main risk would be if an announced merger deal fell through. As the managers open the position, they calculate from the beginning the impact of the withdrawn merger on the entire portfolio and systematically cover other types of risks such as currency risk, financing, dividends….
In the case of an unfavourable evolution of a strategy, the Stop Loss system will function in the following manner :
• Alert level
• Liquidation level
The risk committee meets weekly, to review all the positions in the portfolio and to verify that all the ratios are in compliance with the applicable rules and regulations.
In addition, Laffitte Capital Management chose to outsource the function of the compliance officer role to a specialized organisation called "2AM - L’Atelier de Asset Management ".
- Identify means to deal with the risk linked to the principle strategy for the fund while systematically handling all other types of risks.
- Quantify, from the initiation point of a position the amount of the maximum principle risk.
- Manage the risk by using a strict management system with limits and a Stop Loss.
As an example, for the Laffitte Risk arbitrage fund, the main risk would be if an announced merger deal fell through. As the managers open the position, they calculate from the beginning the impact of the withdrawn merger on the entire portfolio and systematically cover other types of risks such as currency risk, financing, dividends….
In the case of an unfavourable evolution of a strategy, the Stop Loss system will function in the following manner :
• Alert level
• Liquidation level
The risk committee meets weekly, to review all the positions in the portfolio and to verify that all the ratios are in compliance with the applicable rules and regulations.
In addition, Laffitte Capital Management chose to outsource the function of the compliance officer role to a specialized organisation called "2AM - L’Atelier de Asset Management ".