When insurance firms look at prospective asset managers to invest in, their main considerations are the level of risk, return on investment, and liquidity. Investing in assets that align with the company’s risk appetite and provide competitive returns while minimizing risk is crucial.
One way that investment teams at insurance firms are managing this is by leveraging automated due diligence platforms to provide a complete picture of their potential investments and for ongoing monitoring of their existing portfolio. This is not only to track potential risks, but also to measure performance and predict future returns.
The first emphasis of an automated solution is risk assessment. By utilizing advanced data analytics and machine learning algorithms that sift through large amounts of data and score data into actionable reports, automated due diligence solutions can identify potential red flags or concerns with investments, enabling the investment team to make informed decisions that align with their risk appetite.
The second emphasis is maximizing returns while minimizing risk. Human analyst can work more efficiently by focusing on drawing the connections between datapoints and the trends they predict, rather than sifting through the data itself. The focus shifts from data gathering to data interpretation, and more time can be spend deriving alpha-seeking insights.
The third emphasis must then be liquidity management. For insurance firms, it is critical to have very liquid investments in case they have a high volume or concentration of claims that they need to cover. By simplifying the ongoing monitoring of their managers and providing real-time updates on the liquidity of different assets, automated solutions enable investment teams to promptly identify potential liquidity issues and take necessary action to ensure timely access to funds.
While automated due diligence solutions are not a silver bullet to all problems, they offer an efficient and streamlined approach for insurance firms to evaluate potential investments with asset managers. With advanced data analytics and machine learning capabilities, these solutions can help identify potential risks, maximize returns, and manage liquidity concerns, enabling insurance firms to make informed investment decisions that align with their risk appetite.
Get in touch with the team to discuss further or request a demo of our award-winning software platform, Dasseti Collect