AIPERION Launches AI-powered Investment Risk Management Solution for Institutional Investors
19 April 202013 April 2020 | News
- A brand new state-of-the-art investment risk modeling and analytics framework for sophisticated institutional investors, RiskKey® is now being brought to market by Aiperion, less than one year after the partners of Core Capital Management and Fortech combined their investment modeling intellectual property and technology strengths to form the new fintech company and brand.
- Distributed in a unified delivery model, RiskKey®, Aiperion’s cloud-hosted risk management software solution, leverages the power of complex mathematics and AI to provide investors with a different and more comprehensive view of the nature of risks they take.
- The new digital product is an integrated part of Aiperion’s comprehensive suite of offerings, which also includes highly specialized risk consultancy, R&D and technology services.
- Through a consultative approach, Aiperion helps institutional clients take a proactive and scientific approach to the way they manage risk in multi-asset portfolios
Today, Aiperion LLC, a consulting, technology and scientific research firm specializing in investment risk management, officially launched its RiskKey® software solution. With a powerful suite of tools that enable advanced investment risk modeling and analytics in an intuitive web-based environment, RiskKey® provides institutional investors with a dramatically different and more comprehensive view of the risks in multi-asset portfolios.
RiskKey® is the product of a long-standing collaborative relationship between Chicago-based alternative investment manager Core Capital Management and Fortech, an award-winning software development company headquartered in Cluj-Napoca, Romania. The two companies joined forces last year, leveraging their synergies, to form Aiperion.
RiskKey® Software Foundations
The ground-breaking mathematical framework and intellectual property that form the foundation for RiskKey®, including sophisticated AI algorithms, are the product of nearly two decades of on-going research and development efforts led by Aiperion’s founder, Dr. Sorina Zahan, a former university professor, researcher and author in the area of artificial intelligence. As Chief Investment Officer of Core Capital Management, a Chicago-based alternative investment manager, Dr. Zahan’s vision has always been to empower investors by transforming mathematical complexity in tools and concepts that speak directly to practitioners’ intuitions.
Today’s launch places Aiperion’s powerful and insightful risk management framework directly in the hands of sophisticated institutional investors, giving them more visibility and control over the risks they take.
“The benefits of the RiskKey® software may never be more evident and compelling than they are today. A major lesson from the current market environment is that investors can no longer afford to work with averages and must take step towards working with full probability distributions. RiskKey® achieves this while also eliminating the overwhelming number of dangerous assumptions necessary in most risk models (estimated correlations, linearity, continuity, causality, normal distributions). It naturally avoids some of the most costly practices, such as reliance on time series data like trailing returns. As a result, RiskKey® is particularly well equipped to model portfolio behavior in the extreme conditions we face today. At the same time, its major purpose is long term: to give institutions a more realistic assessment of their chances to meet investment goals” – Sorina Zahan, Founding Member and CEO of AIPERION.
RiskKey® employs a factor-based analysis approach utilizing fundamental risk factors that have been independently replicated across data sets and proven to explain long-term returns in a cross-section of assets. Compared to many of the solutions offered in the marketplace today—which utilize data mining (aka “factor fishing”) techniques that yield spurious factors, inaccurate results, and overfitted models that fail out-of-sample—the RiskKey® software’s higher-fidelity models are robust and provide intuitive and actionable results.
Leveraging its cutting-edge technology suite, Aiperion works alongside its clients to discover solutions to the most diverse and complex risk management problems.
Tapping into the Realm of AI and Small Data
The integration of next-gen tech, such as neural networks and other AI methods, places RiskKey® right at the forefront of innovation in fintech. Representing a much needed technological breakthrough in an industry known for its growing dependence on big data, the RiskKey® software’s proprietary AI technologies allow for the development of robust risk models using small amounts of data, which is the reality that confronts most, if not all, institutional investors.
“Traditional approaches are pretty good for analyzing and interrogating structured sets of data. However, investors are typically confronted with large amounts and variety of unstructured data or, to the contrary, sparse and incomplete data. Utilizing data science and advanced mathematical algorithms, we are able to extract exceptional explanatory power from limited amounts of data” – Marcel Cremene, Senior Scientist and Partner at Aiperion.
“Technology has the power to advance human thought and, in this case, spawn a radically new risk management paradigm. By equipping investors with the right tools, we help them to more adequately manage their portfolios while empowering their decision-making autonomy, in full awareness of portfolio vulnerabilities. True to our engineering DNA, we are excited and honored to serve this vision” – Călin Văduva, Fortech CEO and Partner at Aiperion.
Revolutionary Aspects of the RiskKey® Software
- Utilizes proprietary RiskPrint® technology to provide a visual representation of the results of mathematical processing behind the RiskKey® software’s multi-dimensional risk analysis. Therefore, it allows users to easily identify changes in systemic risk that result from the evolution of risks along the various dimensions (similar to viewing various surfaces of a multi-dimensional object from different angles);
- Naturally embeds the variability of correlations among investments, which can fluctuate dramatically over time, particularly in extreme market environments;
- Allows investors to understand portfolio behavior by modeling the non-linearity of risks;
- Gives users the option to utilize artificial intelligence, particularly several neural network algorithms capable of detecting patterns that are indistinguishable to the human brain, to improve the precision of models;
- Is designed to work under opacity and with sparse data, a reality facing most institutional investors;
- Can be used to analyze any portfolio in a single model, independent of the underlying mix of investment styles (e.g. traditional, alternative, formulaic, quant, public and private investments, including private equity and venture capital), providing a realistic way to objectively compare truly unique investment opportunities;
- Can open “black boxes”, seeing right through the financial engineering dedicated to hiding risks so that they are not visible in conventional risk frameworks.
AIPERION is a Chicago-based consulting, technology, and scientific research firm specialized in risk management solutions for institutional investors. The fintech firm was founded by the partners of Chicago-based Core Capital Management – an alternative investment and scientific research firm – and Fortech – the Romanian owned IT services provider, repeatedly recognized in Deloitte Technology Fast 50 rankings and EY’s Entrepreneur of the Year Program.
By leveraging their long-standing successful business partnership and broadening their combined, complementary services capabilities, the founding members are aiming to give investors more visibility and control over their portfolios, across a broad range of asset classes.