Our approach to risk analysis and risk quantification enables our clients to estimate financial repercussions of risk realization and a common denominator for ranking and managing different risks.
Identification and quantification of each factor of risk that affects the client’s business. Summing up the effects to obtain capital at risk on the company level. This analysis enables client tailored determination of optimal capital structure, pricing strategy, hedging strategy.
a) Risk identification – We identify key factors of risk that affect the company’s performance – also the hidden risks.
b) Risk quantification – This phase essentially attaches values to worst-case scenarios and is thus essential for decision making.
c) Risk aggregation – The results of quantification phase are summed up to the company level. Additionally, we identify factors of risk that contribute the most to the overall exposure – effectively we identify key areas that need special attention/treatmement.
d) Policy recomendation – Preventing or treating negative impacts of various risk factors on company performance. We provide both quantity- and cost-wise optimization of hedging and exiting strategies. Knowing the contribution and importance of individual risk factors, a company can improve its pricing policy so that the prices reflect the risks, associated with different products.
e) Credit risk – The past few years have shown the importance of proper handling of credit risk and the possible drawbacks related to its analysis. We have developed a simulation model that enables us to analyse the sustainability of indebtdness for a given company. Through the simulation model we can:
Besides automated software solutions we also offer estimation of credit risk exposure, regardless of the credit portfolio’s structure. With this information we can calculate the required markup and payment-term policies that mitigate the exposure, or derive appropriate compensation for the taken risk.
We also wish to transfer our knowledge to our clients and develop their in-house capabilities by providing support and training for all the above-mentioned services as well as for the use of our software solutions.