Introduction
One of the core stages in Portfolio Management is Risk Management. Man group which is one of the biggest financial institutions globally, has the core belief that risk management of portfolios is just as important as alpha generation.

The Model
MacroVar risk management models monitor global financial risk conditions and provide automatic signals when market risk has changed by analysing systemic segments of global financial system and markets using quantitative methods.

Analyzing the Global Economy and Markets versus Financial risk
Financial markets and the real economy have historically experienced a series of severe crises. During these financial crisis, catastrophic investment and economic losses where experienced. It is critical for any investment or business strategy to understand financial risk conditions and adapt strategies based on these conditions.

The global economy and financial markets experience long-term growth. When financial risk is low, financial markets operate smoothly providing ample liquidity to financial markets and the economy. During these periods high growth assets like stocks experience high returns and are priced efficiently based on their fundamental drivers. On the contrary, when financial risk is rising, market liquidity deteriorates because of a loss of confidence in banks, funding institutions or governments which causes a feedback loop of surging funding costs, increased price volatility and asset fire sales.

MV Risk Management Model Components Overview

MacroVar produces a composite index called MV Risk Index representing current global financial risk conditions.