AI Portfolio Insights and the Future of Risk Management

Research Paper
Manuel Rueda, Vicente Albíter, Zach Tokura, Samuel López, Andrew DeMond, Will Baker, Greg Recine
June 10, 2024
Preview
The role of risk management for institutional investors is evolving. Risk leaders are looking to broaden their teams' focus beyond traditional risk measurement and increase their influence with investment teams. To support this transformation, MSCI is launching its first solution powered by generative AI, MSCI AI Portfolio Insights. It enables risk leaders to scale up their impact with automated analysis that speeds up their work and enhances the value of their risk data for investment decision-making. In this paper we introduce AI Portfolio Insights, review the underlying methodology and describe MSCI's approach for using AI-powered tools reliably and safely.
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MSCI AI Portfolio Insights agent answers natural-language questions about portfolio risk in seconds
The diagram illustrates how an AI agent uses context to answer user questions through a multistep process. The process is broken down into several stages: 1. **User Question**: The user initiates the process by asking a question. In this example, the user requests a plot of the risk contribution of the momentum factor to their portfolio over the last month. 2. **Named Entity Matching**: The AI agent identifies and matches relevant entities within the user's question. 3. **Data Manager**: The agent retrieves the necessary data from the portfolio. 4. **Generate Analysis Code**: The agent generates the code required to analyze the data. 5. **Run Code and Validate**: The agent executes the code and validates the results.
The AI agent answers user questions via a multistep process. After adding relevant context, the agent assembles the necessary portfolio data and generates the code required to produce a useful response.
Andrew DeMond
Andrew DeMond
Managing Director, MSCI Research
Manuel Rueda
Manuel Rueda
Vice President, MSCI Research
Greg Recine
Greg Recine
Vice President, MSCI Research
Samuel López
Samuel López
Senior Associate, MSCI Research
Vicente Albíter
Vicente Albíter
Senior Associate, MSCI Research
Will Baker
Will Baker
Vice President, MSCI Research
Zach Tokura
Zach Tokura
Vice President, MSCI Research

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