British-born Joanna Welsh occupies an interesting seat. Based in Miami, Welsh is chief risk officer for hedge fund Citadel. It’s the task of Welsh and her team of 50+ people to manage Citadel’s risk exposure. They are doing so in a world where risks seem to be increasing.
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“You see a risk landscape where risks are starting to converge and stack,” said Welsh, speaking at this week’s Reuters Momentum AI Finance 2025 event. The largest cap, biggest companies in the market have interdependencies, observed Welsh.- “Revenues need to keep pace with debt. The appetite for the debt needs to keep pace with the rapid innovation in the cycle. You have 30, 40 year debt obligations being issued over things with a four-year depreciation cycle.”
While risks are mounting, Welsh noted that the market for lower quality securities like zero coupon convertible bonds has expanded, as has the market for illiquid investments like private credit. “Let’s just call it, a brush fire could be pretty healthy.”
If ignition occurs, it’s Welsh’s role to make sure Citadel comes through the flames. “It’s our job to make money no matter what. That’s what we’re here to do,” she told the event’s attendees. There are going to be “periodic washouts” and some “painful short term drawdowns” on “great companies,” but Citadel’s intention is always to make money, said Welsh. “We’re going to construct our portfolios in a way that we want to be resilient over quite a broad range of outcomes.”
Citadel has $71bn in assets under management. It has a “very broad view of the landscape” because it trades equities, single name credits, convertibles and commodities, said Welsh. Every day, Welsh said people at the fund have “open conversations” about where the risks lie. Talking like this, is “not doom and gloom,” but, “scenario-building in your head so you could react when the time comes.”
Does AI help with her role? Only partly. Like Citadel CEO Ken Griffin, Welsh says AI is a tool, not a game changer. AI can help individual portfolio managers keep up to date with the content of conferences, white papers and research, said Welsh. Citadel already has AI embedded into its landscape.
Although AI helps with the “alpha hunting process,” Welsh said risk management is ultimately about “old-fashioned good corporate governance.” – “Making sure you have a liquidity profile, an exit plan, a fundamental understanding of the risks involved.”
She said this has become more complicated in the world of algorithmic trading where “volatility spikes and pulses, they hit harder, they fade faster, they repeat more often.” But Citadel is playing the long-game. “It’s our job is to survive those battles as well as win the war,” observed Welsh.
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