Risk policy

Please contact support@viveapp.com if you would like to be provided with the English Version of this document.

‍

Introduction to risk policy

Risk policy forms the core of Vive's investment approach. Vive bases its strategies on risk budgets, which optimally align investments with the goals and risk preferences of its customers. This enables Vive to make the investment process not only scientifically based and efficient, but also personal and flexible.

Vive believes that a good risk policy is more than just risk management at the portfolio level. It is a dynamic process that focuses on personal control. The best form of risk management is you. That is why Vive's risk policy is not only designed to optimize risks and returns, but also to provide you, as an investor, with continuous insight and an action perspective.

By establishing a dynamic risk budget for each client and each financial plan that can change over time, Vive ensures that investors are exposed to investment risks very accurately and efficiently. This means that you do not run unnecessary risks but also miss out on potential returns. Vive ensures that you, as an investor, always have insight and an action perspective to control your investment risks.

What risk policy is being implemented?

Vive's risk policy is fully tailored to the investor's individual needs and financial situation. Vive sees risk not as a limitation, but as a means to achieve your financial goals. The risk policy ensures that you not only have a well-diversified and efficient investment portfolio, but also the insights and tools to manage it.

Where traditional institutions often work with fixed risk profiles such as defensive, neutral or offensive, Vive opts for a customized approach. Vive acknowledges that each investor is unique and that risk preferences may even vary by financial goal.

That is why Vive uses Value at Risk (VaR) as a core measure for risk management. This means that the maximum loss rate over a period of one year is calculated and adjusted to what you consider acceptable. Based on this measure, Vive optimizes investment strategies so that your investments stay in line with your personal risk budget and goals.

To do this, Vive uses an internally developed Economic Scenario Generator (ESG). Using this technology, Vive can scientifically calculate the downside risks and expected returns of various asset classes - such as stocks, bonds and money market instruments.

Vive offers continuous monitoring of your portfolio and closely monitors developments in relation to your personal goals. This means that you not only gain insight into the performance of your investments, but also receive concrete signals when action is needed.

Using advanced technology and scenario analysis, which calculates hundreds of thousands of market scenarios, Vive ensures that:‍

Risks are identified early— You will receive timely alerts if market developments or portfolio performance deviate from the expected price.

Dynamic adjustments are possible —Your risk budget can be adjusted if necessary so that it remains in line with your personal situation and goals.

Transparency and control are key — You always have insight into how your portfolio is developing and remain in control of your financial future.

In addition to personal control, Vive also applies advanced risk management at the portfolio level. In this way, risks are actively managed and adjusted where necessary. To do this, Vive makes use of:

Dynamic risk management — The risk budget is continuously evaluated and can be adjusted based on changing market conditions or personal goals.

Rebalancing — The portfolio is automatically adjusted as soon as it falls outside the strategic range, so that the intended risk-return ratio is maintained.

Broad diversification — Investments are spread across multiple asset classes, regions, and sectors to minimize concentration risks and limit the impact of market volatility.

Scenario analyses and stress tests — The portfolio is constantly subject to hundreds of thousands of simulated market scenarios, allowing Vive to assess how your investments perform under different conditions and take proactive action when necessary.

With this approach, Vive offers a carefully managed and flexible investment process, where you, as an investor, are in control and can make conscious choices. In this way, together, we ensure an optimal balance between risk and return, tailored to what really matters to you.

How is the risk limited and what risk measures are used?

Vive applies coherent and carefully structured risk management to ensure that risks remain within acceptable limits. This is done through a combination of broad diversification, strict selection criteria, active monitoring and risk measures that match the customer's personal goals. The following measures are used to reduce risks:

Widely diversified portfolios
By investing globally in different regions, sectors and asset classes (such as stocks and bonds), the portfolio becomes less sensitive to specific market or sector shocks. This broad diversification helps to reduce overall risk and prevents excessive dependence on individual markets or companies.‍

Strict selection of investment funds
Vive only invests in UCITS funds with daily tradability, sufficient diversification and transparent costs. When selecting funds, several risk mitigation criteria are used, such as:

— Currency risk — Where possible, unnecessary currency risk is avoided.

— Interest rate risk — The duration of bonds is carefully tailored to the client's risk references.

— ESG criteria — Funds are assessed for sustainability risks to minimize long-term risks and encourage responsible investment.

‍Lifecycle approach and rebalancing

— For plans with a fixed end date, the risk level can be gradually reduced as the end date approaches, reducing the risk of major losses at a critical time.

— Rebalancing takes place when the portfolio deviates too much from the agreed risk limits (VaR) and the desired level of end goal security. As a result, the portfolio remains optimally aligned with the investment strategy and objectives.

No complex or non-transparent products
Vive avoids investing in complex or opaque products, such as hedge funds and funds with complex derivative structures. This prevents unpredictable risks, hidden costs and illiquidity, so investors always have a clear insight into their portfolio.

What risk measures are used?

To accurately assess both short and long term risks, Vive uses various risk measures that may vary from plan to plan:

Value at Risk (VaR): The maximum accepted (negative) return within one year — given a 95% confidence level — in a bad weather scenario. Preview: A VAR of 15% means that, in a bad scenario, the portfolio can fall by up to 15% within one year, with a 5% chance of a greater loss.

Impairment to Mission (ITM): The maximum allowable deviation from the final goal of the plan with a 95% confidence level. Preview: an ITM of 30% means that, in a bad weather scenario, the portfolio may deviate from the final goal by a maximum of 30%, with a 5% chance of a larger deviation. This measure is used in plans with a concrete final goal.

These measures form the basis for the design and risk management of each portfolio and each has its own function in determining the dynamic risk budget:

— VaR focuses on short-term risks (maximum loss within one year).

— ITM focuses on the long-term goal (maximum deviation from the final value).

In addition to customer-oriented risk measures, Vive also performs internal analyses to ensure portfolio stability and efficiency:

Volatility (standard deviation): This measures the mobility of the portfolio to gain insight into the extent of price fluctuations.

Tracking Error: This measures the extent to which the passive investment funds differ from their underlying index.

Through this combination of risk measures and management tools, Vive can make a thorough and objective assessment of the risk level and ensure that the portfolio optimally matches the client's investment goals and risk preferences.

How is the portfolio monitored for risk?

Vive only works with strategic asset allocation. The portfolios are automatically checked daily to see if they are still in line with the strategic asset allocation. For example, when stocks rise or fall too sharply compared to bonds, a rebalance automatically follows, so that the portfolio fits the desired risk profile again. The underlying strategic asset allocation is periodically recalculated and changed if necessary.

1. Quarterly update: Every quarter, all scenarios are recalculated based on current market conditions.
2. Annual update: Every year, the risk premiums of each asset class are evaluated and it is assessed whether the previously made assumptions are still up to date.

Vive continuously calculates your investment plan based on the latest developments. If it appears that the expected end goal differs from the original forecast, the investment plan will not be adjusted automatically. Instead, you'll receive an “on-track/off-track” notification. This gives you control and, if you wish, you can make changes to:

— The portfolio's risk level

— The monthly deposit

— The target amount

— The end date of the plan

This data-driven, systematic monitoring ensures that Vive's risk policy remains in line with your personal goals and risk preferences at all times.

To provide full control and insight, investors can always view the current layout of both the portfolio and the plan in the Vive app under “Strategic Portfolio”. If desired, adjustments can be made here immediately.

With this approach, the portfolio not only remains optimally aligned with your financial goals, but you, as an investor, also maintain maximum control and transparency about your risk level and the value development of your investments.