Business, market, credit, liquidity and climate risk: identified, quantified and written into policy, then hedged, negotiated and executed.
We have seen firms build a hedging strategy around their forecast of a price. That is not risk management; it is a position. Unless you are in the business of taking that particular risk, the response belongs in the analysis of the underlying business, in the contracts, the customer behaviour and the funding structure, not in a number someone believes.
Our team ran these functions inside Citi, Barclays, Standard Chartered, Bank of America, Fitch and Deutsche Bank. And we do not stop at the recommendation: we negotiate with the lenders, arrange the lines, execute the trades and defend the model to your auditors.
A risk factor can modify cash flows directly, and indirectly by affecting underlying operations. It can also modify other risk factors, creating new exposures or offsetting them. Risk therefore cannot be managed in isolation. Hover any risk to trace every interaction it sets off, all the way to firm value.
The present value of expected future cash flows, discounted at the cost of capital. Risk management raises it by lifting cash flow, by reducing its volatility, and by lowering the rate at which it is discounted.
Hover a risk to trace it. Hover a single line to read one mechanism on its own.
How to read it. Every line is a transmission path with a named mechanism, not a reporting line. Dashed linesrun backwards: an exposure altering the business itself, which is how a market or credit event becomes a structural change rather than a bad quarter. Paths converging on the same node compound, which is why a response to one risk may have to be re-cut because of another.
Five, kept distinct, because collapsing them into one word is how exposures go unmeasured. Hover a card, or tap on a touch device, for what each one is made of.
01Every mandate we take starts here. Read the business model first and the exposures name themselves; start with the exposure and you hedge the wrong thing.
02The prices you did not choose to take a position on. Most of what we find here was never a market call: it was a contract, a funding decision or a data error.
03Exposure taken in the ordinary course of trading and lending, and the place an unmanaged market move eventually turns up, as somebody's inability to pay.
04Where the cost of the response shows up. The hedge that fixes a price introduces margin; the covenant that protects a lender restricts the cash available to support a supplier.
05Banks are rarely exposed to climate directly. It reaches them through clients, sectors and geographies, so the first job is translating an indirect exposure into a measurable financial risk.
These builds exist because of our domain expertise, and they broaden the horizon of what we can advise on while making the execution of that advice more robust. Hover any build to open it.
Ingests source documents, drafts credit approvals, runs projections, ORR and ECL
IFRS 9 expected credit loss engine
Jurisdiction scoring, cross-border restriction, and the country premium behind hurdle rates
Eleven services in two halves. The first half is what most advisers offer. The second half is the reason clients keep us past the report.
Exposure mapped across the value chain and the balance sheet; exposure data validated for completeness; un-hedged positions and mismatches found; delta, vega, DV01 and behavioural modelling; P&L attribution and root cause.
Risk appetite and the retain-versus-transfer decision. Policy, procedures, limit structures and calibration, delegation of authority, mandate letters, committee structure and responsibilities.
The treasury operating model itself: its systems, its data, and whether the process produces numbers the business can rely on.
When a lender, hedge provider or bank proposes a change, whether it leaves you whole, and what it is worth to negotiate. Suitability, spread, economic impact across the combined book, economic equivalence.
Appointment as the named independent party under transaction documentation, determining a replacement rate and adjustment spread on a basis of economic neutrality that binds both sides.
Reading a regulation against your actual size and complexity, separating mandatory from voluntary, scoping under proportionality, then the disclosure framework itself.
Product and structure selection, hedge provider identification, ISDA and CSA, and commercial contract structuring, because a sales agreement that locks volume at price is a hedge without a derivative.
Syndicated lending groups, hedge counterparties, providers' lines and limits, shortlisted banks, borrower term sheets. Representation, not advice.
Price discovery, execution of agreed trades on your behalf, and revaluation of the derivatives portfolio thereafter.
Effectiveness analysis, model development and re-basing onto a replacement benchmark, accounting practice reviewed against policy, and standing with you in front of your external auditors.
Role-differentiated training for boards, credit officers, relationship managers and risk teams. And where the framework needs a system to run it, our own engineers build it.
Two halves, one team. The engineers who build the systems sit in the same firm as the bankers who found the problem. Nothing is handed over, because nothing changes hands.
A West African power producer faced the end of the benchmark its loans and hedges were written on. Its lenders and its hedge counterparty each proposed a replacement. The capability underneath is not specific to that event: it is pricing and negotiating a counterparty-proposed change to a contract you already hold.
The lenders' and the hedge counterparty's proposals assessed for suitability and relative risk, and the credit adjustment spread examined rather than accepted.
Loan and hedge analysed together to establish whether the transition would raise costs against the pre-transition position, and a strategy set for economic equivalence.
The spread negotiated down across the syndicate and separately with the hedge counterparty, as the client's representative, not as an adviser writing a memo.
The hedge accounting model rebuilt on the replacement benchmark, effectiveness re-tested, the client's team trained on it, and the result demonstrated to their external auditors.
Mandates are described without attribution. Each ran from the analysis through to the execution.
Two mandates in consecutive months, kept deliberately separate. The transition proposals were evaluated and re-negotiated; the accounting consequences were then rebuilt and defended.
Procurement contracts mapped from order through shipment, transit and payment to locate hedge points, tenors and price drivers, then implementation as an extension of the treasury team.
Recurring volatility in the P&L attributed to foreign exchange. The cause was found in the data and the treatment, not in the market.
Client names are withheld. Further credentials are available on request.
If you would like to discuss any of these solutions, please do not hesitate to get in touch.
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Advisory to corporates and sovereigns across industries and geographies: funding strategy, capital structure, risk, and the execution that follows.
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Advisory to banks across products and functional areas, as advisers, or embedded in the team that already runs them.
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Transactions no standard product solves: sovereign and cross-border structures, hedging and credit enhancement, project and securitised finance, and capital raising.
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