There are many types of risks associated with managing an investment portfolio like AP6’s. The risks are different from the ones in the listed market, which is why they must be monitored and mitigated using models and tools that have been specifically developed for private equity.
At the overall fund level, there is a risk management process for identifying and measuring risks. Doing so reveals the AP6 risk profile. The aim is, to the extent possible, for the risk profile to be the result of conscientious decisions. This risk analysis is performed each year to identify the likelihood of both strategic and operational risks occurring, along with quantifying the estimated cost to AP6 if such risks were to occur. In order to manage the operational risks, you need to have an experienced organization with the right expertise, a solid structure for decision-making and professional system support for measurement and control. It ensures that the accepted risks have been carefully considered and can be both monitored and managed.