Clarity in the presence of opaqueness
Altica Partners' Proprietary Technology Risk Platform
SCARF is the firm's specialist digital platform that evolved from our Sovereign and Corporate Analytical Risk Framework. It was designed to help our teams identify and mitigate risk across the firm's strategies.
Its objective is to help our teams focus by identifying macro and microeconomic trends across multiple countries and overlaying them with qualitative information to create heatmaps and priorities.
The platform is designed to be utilised across the investment process from origination to structuring, execution and portfolio monitoring.
Output from SCARF is also available to the firm's clients and portfolio companies.
Key core inputs into SCARF include:
1) Quantitative Country Evaluation: Identification of structural trends, medium-term vulnerabilities and shorter-term domestic risk drivers. Some of which include:
+ Macroeconomic data
+ Corruption indices
+ Ease of doing business indices
+ Altica Proprietary Weightings
2) Identification of global macro risks: G4 policy, global growth, financial conditions, sentiment, and commodity prices.
3) Qualitative Information
+ Political cycles, upcoming elections & other key events
+ Altica relationships on the ground (sovereign, regulators, banks)
+ Altica team execution experience
How we use SCARF
As sovereign and macro analysis is embedded into the corporate analytical framework as a key risk factor. It can be leveraged to/for:
Reinforce an investment case through the joint/collaborative analysis of structural macro drivers (growth environment, demographics, terms of trade etc), government policy (fiscal & monetary, regulatory, taxation) and political risk.
Sensitivity analysis: assessing how corporate performance can affect growth deltas, volatility, oil, capital flows etc. Scenario analysis can also help quantify the impact of exogenous shocks via interactive effects.
Portfolio construction and implementation of a hedging programme with respect to commodity prices and currencies.