Risk Management

In today’s complex global environment, properly designed and implemented risk management can be a source of value for companies, whereas unsound or deficient risk management process may have dire consequences. Compass Lexecon assists clients in the development, review, and implementation of risk management programs and transactions. Compass Lexecon experts have provided risk management advisory services to asset managers, financial institutions, corporations, organized financial exchanges and clearinghouses, and (re-)insurance companies as well as brokers, lawyers, regulators and auditors.

Compass Lexecon experts help firms develop more effective strategies to manage their market and credit risks, liquidity and operational risks, reputation risks, litigation exposures, regulatory compliance and due diligence, and then offer clear action plans to implement those strategies. In conjunction with other Compass Lexecon practice areas, we also provide firms with accounting, disclosure, governance, and risk management advisory services – delivering comprehensive advice based on empirical analysis.

Compass Lexecon experts assist clients in the following aspects of the risk management process:

  • Valuation of Financial Products and Structures

  • Market Risk Measurement (including Value at Risk)

  • Credit, Liquidity and Operational Risk Management

  • Development and Diagnostic Reviews of Risk Management Policies and Procedures

  • Evaluation of the Effectiveness of Hedging Strategies

  • Assessments of (Re-)Insurance and Structured Finance Risk Management Programs

  • Transactional Due Diligence for Derivatives, (Re-)Insurance, and Structured products

  • Disclosures Concerning Risk Management Initiatives

  • Strategic Risk Management

The structures and products Compass Lexecon's risk management personnel often review include the following:

  • Derivatives

  • Securitizations and Securitized Products

  • Collateralized Debt Obligations

  • Credit Derivatives

  • Special Purpose Entities

  • Insurance-Linked Securities and 'Cat Bonds'

  • Captive and Mutual Insurance Companies and Protected Cell Companies

  • Finite Risk and Financial Reinsurance

  • Financial Guaranties

  • Multi-Line, Multi-Year and Multi-Trigger (Re-)Insurance Structures

  • Elevated-Risk Complex Structured Finance Activities