At first glance, the Synthetic Risk and Reward Indicator (“SRRI”) appears to be based on a simple volatility calculation to be published in the Key Investor Information document required by UCITS IV.

Further analysis reveals that the SRRI is a more complex matter. It has implications on:

• the risk profile and Risk Management Process of funds and management companies;
• the portfolio management done by asset managers;
• the product management and development functions, and
• the distribution networks.

The SRRI needs to be adequately documented and integrated into the formal Risk Management Process of a fund. It also needs to be permanently monitored against internal limits and alerts, so as to detect and avoid potential migration issues.

IRML complements its independent risk management solutions to encompass the SRRI requirements.

IRML’s SRRI services cover the following:

• assessment of the potential impact of the SRRI on the Risk Management Process;
• calculation and monitoring of the SRRI evolution over time;
• set-up of advanced alerts to warn about potential migrations.

Yves de Naurois, IRML’s CEO, declares: “Assessing the potential impact of the SRRI should be made early in the transition to UCITS IV. It needs to be considered carefully. Our SRRI services include all the steps necessary to integrate the SRRI not only into a sound Risk Management Process, but also in the investment process and even more importantly in product management.”

IRML will discuss the key practical implications of the SRRI in a 30-minutes web-based interactive seminar on 22 February 2011 at 11:30 CET.
To register, simply send an email to Stéphanie Sion ([email protected]). Please indicate “Webinar 22.2” as subject of your email. Stéphanie will provide you with all necessary details to attend the seminar.