Responsibility for Risk Management
The Management Committee: retains ultimate responsibility for risk oversight. This includes setting the Firm’s risk appetite, approving the Risk Management Policy, and overseeing adherence to the Firm’s governance framework. Separation of duties is enforced through independent reporting lines to the Management Committee to ensure zero conflict of interest.
The Ironshield Risk Management Committee (IRMC): provides structured oversight and monitoring across all key risk areas but does not replace the Management Committee’s ultimate accountability. It acts as the central forum for reviewing risk exposures, stress‑testing results, liquidity indicators, counterparty assessments, and operational risk events.
CFO / Chief Risk Officer (CFO/CRO): Holds the CRO role and provides firm‑wide oversight across all risk categories. The CFO/CRO is responsible for independent challenge and ensuring the Firm’s risk framework is effectively designed, maintained and adhered to.
Risk ownership is embedded throughout Ironshield’s business activity and teams:
- CIO: Oversees day‑to‑day investment and market risk management.
- Investment Committee: A critical component of Ironshield’s risk architecture providing an additional layer of governance and challenge prior to any investment being made. No material trade enters the portfolio without IC oversight. There are daily and weekly meetings to approve new material positions, review stress outcomes, liquidity and any exceptions. IC minutes record conditions, size and exit triggers.
- Investment Team/Analysts: Assess portfolio, issuer‑level and thematic risks as part of due diligence, ongoing monitoring and investment proposals.
- COO: Oversees process, operational resilience, procedural and workflow risks.
- Operations Team: Manages operational, settlement, cash control, valuation and data‑integrity risks.
- Compliance: Monitors regulatory, conduct, market abuse and reporting risks
Waystone ManCo: Acts as another tier of independent risk oversight for the UCITS funds (ICF and IHYA). As the appointed UCITS ManCo, Waystone is responsible for ensuring the UCITS funds comply with the CBI UCITS rules, ESMA UCITS guidelines, and UCITS global‑exposure requirements
Investment Selection & Underwriting
Ironshield’s portfolio selection process embeds risk analysis directly into every stage of credit sourcing, diligence, modelling and governance. The approach is explicitly fundamental, bottom-up,forensice and scenario driven, ensuring that risk control is inseparable from position selection. We distinguish ourselves through a “Risk-First” approach where fundamental credit analysis focused on genuine cash flows, capital stack integrity, and scenario-weighted outcomes is the primary driver of capital preservation and alpha generation. Our framework ensures that “alpha” is not merely market beta but a result of rigorous, repeatable discipline from sourcing to exit.
Credit Sourcing: Ideas are generated via broker flow (including niche local brokers), sponsor engagement, auction windows, and proprietary screening. Sourcing is a core responsibility shared across the entire investment team.
Fundamental Valuation: Every position is supported by a documented recovery and cash-flow model. We utilise audited financials rather than management-adjusted figures to distinguish fact from fiction. We only proceed if the modelled reward materially exceeds the downside scenario.
Cash Flow Forensic Gate: All management-adjusted EBITDA or “add-backs” are stripped out to isolate genuine unlevered free cash flow. Specific screening for off-balance sheet debt used to mask corporate leverage.
LTV & EV Cushions: Equity cushions computed via our free cash flow forecasts-based Enterprise Value (EV) calculation with consideration to current equity market caps for listed companies.
Structural Subordination: Technical review of inter-creditor agreements to identify “creditor-on-creditor violence” risks and structural leakage points.
Scenario-Weighted Valuation: Valuation is always compared to downside outcomes; positions proceed only if the reward compensates for the downside in our scenarios. Every trade requires a Probability-Weighted Model encompassing for example:
- Refinancing/Par Scenario
- Restructuring/Distressed Exchange Scenario
- Liquidation/Recovery Scenario
Pre-Trade Governance: Material trades require a formal “Pre-Trade Package” including:
- Investment thesis and catalyst roadmap.
- Liquidity runway and sponsor alignment assessment.
- Sensitivity analysis for tariffs/policy shifts.
- Probability-weighted upside/downside stress outcomes.
All trades are presented and discussed with the Investment Committee (IC) and generally undergo multiple rounds of Q&A with the PM before being placed in the portfolio.
The Governance Gate: Within a day of sourcing, a “light-touch” Investment Committee (IC) meeting is often held to decide whether to proceed with deep modelling. If progressed to deep modelling, the analyst presents to the team once unanswered questions and scenarios considered are determined and a probability weighted outcome is priced.
Portfolio Limits & Sizing
“Max Loss” Sizing Constraint:
Position sizes are derived from downside impact.
Hard Limit: No single name is permitted to carry a modelled downside exceeding a % of NAV under defined adverse scenarios.
Concentration & Exposure Limits:
- Gross Exposure: % caps; exceedance requires formal CRO and IC sign-off.
- Single Issuer: % Capping NAV (absolute ceiling).
- Sector/Geography: % caps per sector and country to prevent thematic contagion.
Short Book & Tail-Risk Hedging: Shorts are selected with the same forensic discipline as longs.
Mechanical Exit Triggers: All positions carry pre-agreed triggers (e.g., sponsor withdrawal, liquidity runway shortening, or thesis invalidation). If a trigger is hit, the team immediately updates their scenario weighted valuation, evaluating the position from a “clean slate” view and redetermines whether the position and risk-adjusted return justifies maintaining the position.
Escalation & Lessons: Any material drawdown triggers a documented lessons review and policy update, which is visible in monthly investor reporting.
Risk Categories Monitored
Alongside the bottom‑up risk assessment inherent in Ironshield’s investment process, the Firm undertakes systematic monitoring across the following defined risk categories:
Market Risk: Monitoring of Spread risk, interest rates shift , FX exposures, derivatives exposure and basis risk. Portfolio level VaR calculations and trend monitoring. Regular stress testing against Historical and hypothetical scenarios.
Counterparty Credit Risk: Exposure to brokers, banks, issuers. Review of counterparty creditworthiness using ratings, CDS levels and financial disclosures. Monitoring of collateral terms, thresholds and level of exposure.
Liquidity Risk: Market depth, bid/offer dynamics, funding and margin capacity. Time to liquidate analysis under normal and stressed conditions. Validation that portfolio liquidity aligns with fund-level redemption terms.
Leverage Risk: Daily monitoring of regulatory leverage (UCITS, AIFMD) and economic leverage, including embedded derivative leverage.
Operational Risk: Monitoring of system stability, operational controls, vendor risk, cybersecurity, and human error. Oversight of trade capture, reconciliation and settlement processes.
Model & Valuation Risk: Independent pricing verification against multiple sources, model assumptions where relevant, monitoring for stale marks. Valuation discrepancies reported to the Valuation Committee.
Legal/Documentation Risk: Review of enforceability of ISDAs/CSAs; monitoring of onboarding of side letters and counterparty agreements.