How we manage risk at JioBlackRock

Step 1. A detailed risk profile assessment

Every investor is unique. So before advising on a personalised investment plan, we conduct a risk profile assessment to understand your willingness and ability to take on risk. This assessment allows us to classify investors into categories, referred to as your Investor Type. Knowing your Investor Type allows us to design a personalised investment plan that matches your investment objectives and risk tolerance.

Step 2: Pre-screening funds

We conduct due diligence on every asset management company and investment fund that we offer investors, using both qualitative and quantitative parameters. This is to ensure that the underlying funds meet our criteria threshold such as evaluating the fund manager’s credibility, risk management practices, and how closely the fund tracks its benchmark.

Step 3: Diversifying portfolios to spread risk

Diversification helps to spread risk thus reducing impact across your investments. Instead of concentrating on just one asset class or sector, we advise investing in a mix of asset classes, and company sizes. This approach cushions portfolios against market shocks, because when one segment underperforms, others can stabilise returns.

Step 4: Stress testing and scenario analysis

Risk isn’t static, it evolves with markets. That is why we use scenario analysis, powered by BlackRock’s proprietary technology Aladdin, to assess how your investments might behave under different conditions. Instead of focusing exclusively on returns, we analyse factors like interest-rate and foreign-exchange sensitivity, and sector exposure. Aladdin simulates “what-if” scenarios, giving us visibility into potential vulnerabilities before they materialise.

Step 5. Monitoring performance

Once your personalised investment plan is live, monitoring can begin. We measure and compare the performance of your underlying funds against their respective benchmarks and peers, analysing investment characteristics, performance and consistency.

To ensure your investments do not diverge significantly from your Investor Type, we continuously monitor the invested portfolio’s deviation to the intended allocations, known as “tracking errors”. We also review risk-adjusted performance metrics to assess if returns justify the level of risk taken. This helps maintain the intended asset allocation as per your Investor Type.

Step 6: Managing portfolio risks across market cycles

Our focus is on allocating your investments across different asset classes suitable to your risk-taking ability and willingness. This keeps your portfolio within safe risk limits. The scenario tests we run helps to see how investments might behave during extreme events, like big interest-rate changes or stock market drops. This helps reduce unexpected shocks during market downturns.

Step 7: Rebalancing nudges powered by Aladdin

Markets move and allocations drift, so we use BlackRock’s Aladdin technology as our risk management platform to send timely “nudges” to rebalance when it detects meaningful deviations from the advised asset allocation. This keeps your plan aligned with your Investor Type, promoting long-term stability.

Step 8: Governance and oversight

Your personalised investment plan is guided by a robust governance framework to ensure decisions are based on solid data and insights. Our investment team and senior management review and approve fund choices, share investment guidance, and suggest ways to manage risk. They also check liquidity, diversification, volatility and how different assets react to factors like interest rates and inflation, and ensure decisions are made in investor’s interest.

At JioBlackRock, we integrate risk management throughout the investment journey. Human experience, together with Aladdin’s analytics, is used to support personalised investment planning aligned with your stated investment objectives.

Approval No: 44968