With a BA and MA as a Zoologist at Oxford University, England, Peter first worked as part of a Euroloan syndications team at Swiss Bank Corporation, London. He then took an MBA in Finance from London Business School before moving to the United States.
Trader and Trading Management Experience
Peter joined Bankers Trust as a trader, including starting a New York-based international bond desk. This was the first such multi-currency, multi-asset book of any major bank or investment bank in New York. The need for multi-asset analytics and a multi-currency portfolio led him to learn programming and to develop his own bond calculators and multi-currency portfolio system. It became clear in 1983 that a full multi-currency and multi-asset risk model was needed with the growth of derivatives trading and a global clientele. His ability to understand how technology could be used to transform the business led to his moving to the newly-created front-office technology group as one of three senior managers who developed the next generation of global trading systems for the bank.
He was then recruited by Merrill Lynch Capital Markets as co-head of global government securities, mortgage-backed securities and foreign exchange. There he was responsible for all non-trading activities including risk management, credit, technology, operations and planning. He was also one of two Executive Vice Presidents for the Merrill Lynch International Bank group worldwide responsible for regulatory relations, including the foreign exchange activities in the bank group. This was his first experience of private banking and wealth management.
Risk Management Companies
Peter founded Sailfish Systems in 1990. In 1992 Sailfish introduced the first full-valuation, full historical simulation, multi-asset class, multi-currency risk system with the United Bank of Kuwait and Mobil Corporation as the two initial clients at a time when the top banks were just beginning to look at variance/covariance models. Other clients included Bank of America, National Bank of Canada and Ontario Teachers’ Pension Plan. This system was licensed by JP Morgan at the same time Sailfish was invited to introduce RiskMetrics with JP Morgan in 1994. Sailfish Systems was sold to Reuters in 1995, where it continues as part of the Kondor+ system.
Peter then founded Askari, which developed a three-dimensional risk model that included dynamic portfolios changing over time. The initial clients were Mobil Corporation, the Development Bank of Canada and State Street Bank. The system was particularly focused on asset and liability managers but the use of a precise valuation library led trading banks and hedge funds to use it for both valuation and risk. Clients included Soros Asset Management, Pequot Capital Management, GIC Singapore, Credit Agricole Asset Management, Mobil Corporation, National Bank of Canada, Allied Irish Bank, and DLJ Pershing. Askari was sold in 1998 to State Street Bank, where he continued to work for four years, including running the development of the technology platform for the institutional investment management outsourcing business, including PIMCO. Askari was later sold to the software company DST Systems, where is remains today. State Street retained an internal license and their TruView system is processing in excess of USD 4 trillion a day for institutional investors.
In 2003 Peter joined his old colleagues and competitors at RiskMetrics Group as Vice Chairman with a strategy role across the business prior to the recapitalization of the company and its public listing. This lead to the company putting an emphasis on services and outsourcing (comparable to Askari) as well as a new generation of risk products.
Return To Being A Practitioner
It was clear to Peter that risk systems now exist with plenty of good choices. What is also clear is that businesses do not know how to use these tools effectively. He returned to become a consultant and practitioner: a tool user rather than a tool builder.
He has spent the next six years as a consultant and executive for a large quantitative investment firm (First Quadrant), a diversified fund-of-funds group (Dorchester Capital), two large family offices with captive broker dealers and hedge funds (Strome Group and COR Capital). In every case he found that people have tools but do not know how to apply them. Numbers are cranked out and checked diligently but they have little impact on how the real risk decisions are made. This is not a ‘data’ issue per-se but how to create meaningful information from the data to impact investment decisions and risks.
There are two reasons for this. First, the numbers are usually consultant-compliant check-box standards with no thoughtfulness as to how these are, or usually are not, relevant to the processes being managed. Secondly, there is no understanding of where risk management fits into the overall management process. It stops at “We have a risk report”. There is no consideration as to where the value-added is: better investments, more consistent portfolio alpha, more predictable return volatility, more balanced expectations with investors, more sustainable product development, etc.
We should be asking ourselves: How do we know where we create value in our process? How do we demonstrate this to our managers or clients? Is this luck or is this skill? How do I show that I have a disciplined, controlled and managed process that can deliver consistent results?
The answer to these questions emerged under the influence of Daniel Khaneman: ground complicated decisions with objective and relevant analysis. The result was the development of the Arangur Investment Portfolio Analysis and Investment Exposure Analysis, developed with a large Californian public pension plan. This produces analysis of the active decisions of the portfolio, regardless of whether by a computer program, fundamental analysis or market timing. Both models are free of any “factors” or “models” – just like the risk models above, they are based on brute-force calculation processes not analytical short-cuts.
Today Peter is living in Geneva, Switzerland, after spending 30 years in the United States. He has worked there with two multi-family offices and a single-family office, where he developed a multi-bank data consolidation system for positions, prices, movements and performance for analysis and highly customizable consolidated reporting to the family and executives. The goal remains the same: provide meaningful information that impacts real decisions!