First Quadrant


	WE MEASURE, MONITOR, AND MANAGE RISK. At First Quadrant, we seek to exploit the cyclical nature of fundamental market inefficiencies and the awkward response of the traditional investor. We do this while simultaneously controlling risk.
	RISK MANAGEMENT IS ASKING ALL OF THE QUESTIONS…AND BELIEVING NONE OF THE ANSWERS > Risk is unexpected — even if we expect the unexpected. To minimize model risk, we use both parametric and non-parametric models. To manage sample risk, we vary sample periods for the same risk analysis. To avoid systematic blind spots, we use proprietary data and models as well as market standard data and models. RISK MANAGEMENT IS MORE MANAGEMENT THAN RISK > We use automated systems with minimal intervention to get to the numbers quickly. We then assemble the right team (including managers, traders, and researchers) to consider the meaning of any undesired risk and set a course of action. RISK MANAGEMENT IS TOO IMPORTANT TO LEAVE TO RISK MANAGERS > Our understanding of risk management pervades our business. It affects our investment decisions, investment operations, and both product and business development. We all work together to generate the best possible opportunity from a universe of managed risks. RISK MANAGEMENT IS INVESTMENT MANAGEMENT > Risk is the raw material that complex and dynamic markets provide us, which we must find and refine to systematically outperform. At First Quadrant, we consider risk both during the investment process and, separately, in the Risk Office’s independent review. So if the topic is investment management, then at First Quadrant we’re talking risk management.