Risk Model Validation
Know That Your Models Are Working
How do you know that the numbers produced by our risk models are accurate? Backtesting is an integral part of Northstar’s risk management platform. All of our models are extensively tested against historical data before being deployed. After being deployed, models continue to be tested against actual performance.
In 2008, many hedge fund risk managers didn’t know if their risk models were working. When risk management mattered most, many risk managers simply didn’t know if their models could accurately forecast risk.
Northstar’s backtesting engine benefits from the close integration of risk and performance data in the Northstar platform. The P&L data required for backtesting risk models is the same P&L data used for performance analysis. Because of this, backtesting is highly automated. Never be uncertain about your risk models again.