What racing cars taught me about risk management in private lending

simon arraj racing cars f1

While I haven’t (yet) had the opportunity to spray victory champagne on the F1 podium with the likes of Lewis Hamilton, let me explain to you why racing cars is like risk management and financial investment.

I LOVE fast cars and aspired to be a race car driver as a child, but got my first taste of racing in my early twenties.

The thrill of the race is not just about the adrenaline rush – in fact, the faster you go, the calmer and objective you need to be.

It’s all about control, coolness and precision.

It’s maintaining presence of mind.

The best professional drivers are superstar athletes who are taught under an intense training programme to gain mastery over the physical and mental stress of driving at breakneck speed around hair-raising track chicanes.

Former racing champion Mario Andretti once said: “if everything seems under control, you’re not going fast enough”, but this is where, as a private lender, I must swap my racing helmet for my ‘risk manager’ hat.

Private lending is not just purely transactional – there is a science behind it, and part of my job is ensuring that the science is as exact and precise as possible when it comes to risk management.

It will never be perfect, as there are always unknown financial and credit risk – just as we cannot predict what other cars on the racetrack might do, and we can only control the car we are driving.

The unpredictability of the market might always throw us a curveball, so the key is developing an intuition to anticipate and mitigate risk.

For me, private lending is capital preservation.

To consistently achieve this, Vado Private ventures rely on the application of two complementary aspects of risk management: a cool head and a bold edge.

Of course, these are also the essential characteristics of every Formula One and Grand Prix champion.

Over the past two years, we have managed 53 transactions with zero losses, injecting $173 million of investment into the private lending market.

We couldn’t have done it if we took our eyes off the road or our minds off the race for a single second.

As Mario Andretti also said: “If you’re so afraid of failure, you will never succeed. You have to take chances”, and this calculated and level-headed sense of intrepidation is at the heart of what I do for my real estate investor partners in order to get the most favourable results.

We stick to our core fundamentals of risk management, and we don’t let the adrenaline rush take over.

If you would like to have a confidential discussion about our due diligence process, annual returns or receive a copy of our Information Memorandum, contact me today.