At I Squared, we use a robust framework to evaluate risk-adjusted returns for infrastructure assets. This process seeks to leverage our team’s expertise to consistently assess investment attractiveness across sectors and geographies. Our approach supports building a globally diversified portfolio with low correlation, strong safety margins, and compelling risk-adjusted returns.
Our approach to ENHANCING RISK ADJUSTED RETURNS
Our risk assessment model, the Risk Wheel, serves three key purposes:
Evaluate Risk-Return Profiles
Assess the potential risk and return of every investment opportunity.
Compare Relative Value
Analyze investments across sectors and regions to identify compelling opportunities.
Track Performance
Provide measurable indicators to monitor the performance of investments over time.
Risk Wheel Illustration
The I Squared Risk Wheel evaluates ten critical risk factors shown below. Each risk factor is scored out of 10 and given equal weighting such that when summed together, results in a risk score for the company out of 100. The higher the risk score, the higher the target gross IRR must be to justify the risk.
SUMMATION
Once an investment is made, the risk score continues to play a crucial role in the management of the investment. We use the ISQ Risk Wheel to regularly monitor the risk profiles of our assets, adjusting our strategies as necessary to mitigate any emerging risks. This dynamic approach ensures that our risk management strategies remain relevant and effective.