Vanguard is ramping up its risk management strategy, instituting a chief risk officer for the first time and expanding its partnership with a risk management fintech firm, RiskFirst.
Vanguard announced on Wednesday that it has promoted its head of the equity index group, Joseph Brennan, to the newly created role of chief risk officer. The firm also announced this week that its institutional nonprofit clients will have access to the RiskFirst risk management technology that its pension clients were already using.
"We believe centralizing our risk management functions under a single senior leader will benefit both our clients and Vanguard,” said Vanguard’s chief executive officer Tim Buckley in a statement.
Vanguard is among a number of asset managers building out their risk management offerings. A Greenwich Associates report from April shows that institutions, particularly buy-side trading desks, have nearly doubled their spending on risk technology for 2018.
In his new role, Brennan will take over Vanguard’s current enterprise risk management program, in addition to overseeing its enterprise security and investment risk management, Vanguard’s announcement said.
He began his career at Vanguard as a fixed income analyst and trader in 1991, according to the company’s announcement. Brennan rose through the ranks to eventually become the chief investment officer of the Asia Pacific region in 2009. In 2013, Brennan took control of Vanguard’s Equity Index Group, where he oversees $3.1 trillion in 319 mutual funds and ETFs, according to the statement.
“Joe's vast and varied investment management and leadership experience both in the U.S. and abroad make him the ideal candidate to integrate and enhance our capable and strong global risk management teams,” Buckley said in a statement.
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Meanwhile, Rodney Comegys, principal and head of the risk management group within Vanguard Investment Management Group, will take over for Brennan as head of the equity index group, according to the firm’s announcement. Comegys joined Vanguard in 1999 and most recently worked as the firm’s head of investments, Asia Pacific, and head of Equity Index Group, Asia Pacific, the announcement said.
In addition to promoting Brennan and Comegys, Vanguard’s move to offer RiskFirst's technology toits nonprofit outsourced chief investment officer clients is another way the firm is looking to manage risk for its customers. The RiskFirst tool essentially allows Vanguard to “stress test” different scenarios that could affect future cash flows at endowments, foundations, and pension funds, according to Vanguard.
“Despite a prolonged bull market, many nonprofits have struggled to generate the returns needed to cover costs, and have reached for riskier, less liquid, and more costly investment products in their search for alpha,” the announcement said.
RiskFirst is now offering a version of its technology to all institutional investors, rather than just pension funds, which is why Vanguard is doing the same, according to the announcement.