Insurance giant XL Capital Ltd. and the Bank of Bermuda Ltd. have teamed up with Morgan Stanley Dean Witter & Co. and Micro Modeling Associates to create an Internet-based software system for measuring risky investments.

Measurisk.com gives pension plans, investment management firms, insurance companies, hedge funds, corporate treasurers and mutual funds a way to measure the market, credit, liquidity, operational, settlement and legal risk of their portfolios.

"Pension funds are exposed to risk as they seek better performance,'' Measurisk.com chairman Robert Glauber said. "They need to understand which risks they are taking, how big they are, which investments or investment managers are contributing to total risk, and how risk is changing over time.'' GTE Investment Management Corp., one of the largest pension funds in the US, has agreed to test Measurisk.com's services. The product is being offered as a means for institutions to evaluate risk without having to invest in their own systems.

Investors using an online questionnaire to input data. The software than quantifies the market risk for all assets in the portfolio, starting at the level of the entire fund and then going down to the account level. Measurisk assembles the market and security data, handles portfolio feeds from the investor's custodian and runs simulations. Morgan Stanley Dean Witter, the Bank of Bermuda and XL have made capital investments in the system.

"We believe offshore fund investors and managers will want to monitor their risks better,'' Bank of Bermuda senior vice president Peter McClean said.

Morgan Stanley will act as a source of information regarding analytics, research and data for risk measurement. The bank will use Measurisk.com to analyse the risks in its own treasury portfolio. XL Capital will also test the software.

"The insurance industry has developed some of the most sophisticated liability models but the same level of comprehensive risk analysis is not readily available for the asset portfolios,'' XL Capital Ltd. chief investment officer Chris Greetham said.

Micro Modeling Associates is responsible for building the Internet-based risk service. The site can be accessed through www.measurisk.com.

Peter McClean: "We believe offshore fund investors and managers will want to monitor their risks better.''