must also proactively pursue topics and have a topical vein. The RMU should be actively involved in setting and implementing the risk agenda and related initiatives. The RMU watches trends in risk as they occur and identifies unusual events to management in a timely fashion. While it is helpful to identify a risk once it is present, it is more meaningful to identify a trend before it becomes a large problem. The RMU is a catalyst for a comprehensive discussion of risk-related matters, including those matters that do not easily lend themselves to measurement. For example, the RMU should be actively involved in the identification of and organizational response to low-probability yet high-damage events. It should promote discussion throughout the organization and encourage development of a context by which risk data and issues are discussed and internalized. The RMU is an element of the risk culture. It should represent one of the nodes of managerial convergence-a locus where risk topics are identified, discussed, and disseminated across the organization and clients. In so doing, it helps promote enhanced risk awareness together with a common risk culture and vocabulary. As a part of the internal control environment, the RMU helps ensure that transactions are authorized in accordance with management direction and client expectations. For example, the RMU should measure a portfolio's potential (i.e., ex ante) tracking error and ensure that the risk profile is in consonance with expectations.11 Together with portfolio managers and senior management, the RMU identifies and develops risk measurement and performance attribution analytical tools. The RMU also assesses the quality of models used to measure risk. This task involves back testing of models and proactive research into "model risk." The RMU develops an inventory of risk data for use in evaluating portfolio managers and market environments. This data, and the methodologies used to create it, must be of a quality and credibility that it is both useful to and accepted by the portfolio managers. This risk data should be synthesized, and routinely circulated to the appropriate decision makers and members of senior management. The RMU provides tools for both senior management and individual portfolio management to better understand risk in individual portfolios and the source of performance. It establishes risk reporting and performance attribution systems to portfolio managers and senior management. In the process, the RMU promotes transparency of risk information. 11 For asset management firms, this oversight spans a different dimension of risk than the function currently performed by compliance departments. In fact, the RMU forms a natural complement to the efforts of the compliance department within asset management firms. By definition, the matching of actual positions with guidelines by the compliance department involves examining events that have already happened. In contrast, by stressing data and exploring both common and uncommon scenarios, the RMU explores the implications of what might happen in the future.