What is risk management in Fincanva?

Fincanva’s risk management system is designed to help users manage their exposure in varying market conditions by dynamically adjusting allocation strategies. This functionality is ideal for investors who want to protect their portfolios during turbulent times while maintaining full participation in favorable environments.

Fincanva enables a "Risk On / Risk Off" framework that lets users define up to two conditional triggers. 

• When a specified "Risk Off" condition is met, the platform automatically applies a more conservative allocation strategy (e.g., shifting assets to cash or safer options)
• Once the "Risk On" condition is satisfied, it returns to the original allocation logic.
• In each state, users can apply a different allocation method. For instance, a portfolio might use Risk Scaling during Risk On and switch to Fixed Weights or Minimum Correlation during Risk Off to reduce exposure and enhance diversification.

Fincanva allows you to apply risk management settings at both the portfolio and model levels.

• Portfolio Risk Management settings govern how capital moves between models within a portfolio based on predefined market signals or thresholds.

• Model Risk Management allows for specific rules that adjust allocations within a model to reduce exposure when risks increase.

This dual-mode risk setup gives users powerful control to implement dynamic, rule-based strategies tailored to market conditions, helping optimize performance and minimize drawdowns.