Risk management

Risk management

Risk management

FSN Capital actively seeks to control and manage risk at the company and portfolio level. We believe that risk management is about avoiding the biggest mistakes through disciplined decision making structures and by creating robust portfolios of companies.

We seek to separate and analyse risk into:

  • Beta risk: exogenously determined (cyclicality, FX exposure, commodity, etc) and;
  • Alpha risk: FSN Capital controlled (operational, integration, technology, corporate governance, etc)

Beta risk

FSN Capital identifies Beta risk in the investment phase. In general we aim to limit exposure to Beta risk. In addition, we have a framework in place to minimize the correlation between the Beta risks on the company and fund level.

We run detailed stress tests each quarter, both on the fund and company level. These tests include a statistical analysis of EBITDA @ risk in addition to several “What if” scenarios for different macro levers that influence the portfolio companies.

Alpha risk

FSN Capital works to reduce the Alpha risks inherent in our portfolio companies during our time of ownership. We accomplish this through our systematic and methodical approach to active ownership and close cooperation with management.

By actively managing the risk exposure on the fund and company level we can make corrective actions if and when deemed necessary.