After the financial crisis demonstrated that they were far more exposed to risk than they thought, institutional investors are employing new tools for evaluating risk. Sebastian Ceria, CEO of Axioma, said it is crucial for pension funds and other asset owners to focus on three key issues. "Understand performance and risk on assets, understand liabilities and exposures on assets, and understand exposure an institution takes on with its counterparties, particularly through derivative transactions," he said.

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