Crescit applies the principal of three lines of defence in its risk management. The first line of defence is the operational part of Crescit Asset Management AB and Crescit’s outsourcing partners Wahlsted och Sageryd AB (WS) and SEB who are responsible for the daily management and the risks that arise within each area.
The second line of defence is responsible for monitoring risk and compliance. These are the independent risk function and the compliance function. The independent risk function is responsible for and manages all risks to which the fund is exposed to. The risk function is organizationally and operationally independent of the portfolio management of Crescit and reports directly to the board of directors.
The third line of defence is the internal audit function which provides an independent review and inspection of the work of both the first and the second lines of defence. The internal audit function checks and tests the effectiveness of the independent risk function.
Crescit has entered a service agreement (outsourcing) with RPM regarding the independent risk function. The board of directors of Crescit Asset Management AB has appointed Christina Eriksson to the role as Risk Officer. The Risk Officer interacts with the responsible portfolio managers of Crescit on a daily basis in order to ensure that Crescit’s risk management functions effectively.
Crescit has also entered a service agreement (outsourcing) with SEB for independent valuation and risk calculation in accordance with the provisions in chapter 11 FFFS 2008:11. SEB’s services consist mainly of; daily calculation of VaR, stress testing and calculation of the fund’s liquidity risk. In connection with the calculation of VaR, an independent valuation of the OTC derivatives is done. The calculations are based on ARMS calculation engine which is supported by Algorithmica Research AB. The results are compiled and reported daily to the CEO, portfolio managers and the risk function. SEB’s services are conducted within the framework of the first line of defence and are intended primarily to be used as a part in the work with risk management.
The risk function is responsible for ensuring that the portfolio management does not breach the VaR-restrictions or appointed stress tests that have been determined in the fund’s regulations and in the internal limits determined by the board or CEO and that all if any breaches are dealt with as soon as possible with the investor’s best in mind. The risk function is also responsible for reviewing the valuation of the OTC derivatives as well as the VaR-estimates and stress tests in order to ensure the quality of the reports.
For a more detailed description of the risk function’s responsibilities and appointed tasks, system, identification, monitoring and control it is important that a prospective investor takes part of the information in the fund’s risk instruction which can be obtained from the fund company.
