We look at risk beyond purely qualitative methods and apply more advanced quantitative methods for assessing market, credit and operational risk. Given the current investment climate, most of banks, asset management companies, even hedge funds are quickly realizing that risk management needs to be an integral part of their organization.
Market Risk Management
One common investing risk is the up and down movement in the value of an investment mainly due to changes in foreign exchange rates, interest rates, stocks and commodity prices which make you vulnerable to financial loss. Braintree offers a way for you to manage these uncertainties and gain insights that can lead to successful hedging strategies and the use of derivative instruments.
We help our clients building the technology infrastructure, qualitative and quantitative models to bring together information from across your organization, combine different instrument types into one portfolio, perform scenario and stress tests, calculate value-at-risk (VAR) measures and deliver customized reporting back to a user.
Credit Risk Management
The goal of Credit Risk Management is to maximize a bank’s risk-adjusted rate of return by maintaining credit risk exposure within acceptable parameters. Banks are increasingly facing credit risk (or counterparty risk) in various financial instruments, including acceptances, inter-bank transactions, trade financing, foreign exchange transactions, financial futures, swaps, bonds, equities, options, and in the extension of commitments and guarantees, and the settlement of transactions.
We help our clients to identify measure, monitor and control credit risk as well as to determine that they hold adequate capital against these risks under regulatory requirements such as Basel II and that they are adequately compensated for risks incurred.
Braintree enables you to
- Access and aggregate credit data across different systems and sources.
- Integrate Credit Scoring/Internal Rating with credit portfolio risk assessment.
- Accurately forecast, calculate, monitor and report potential credit risk exposures across the entire organization, both on the counterparty level and portfolio level.
- Accurately calculate critical measures, such as probability of default (PD), exposure at default (EAD), credit migration, regulatory capital, risk weighted assets, credit value at risk (CVaR) and economic capital. Our analysts can help performing mark-to-market calculations, model risk factors, run Monte Carlo simulations, explore scenarios and build stress tests.
- Evaluate alternative strategies for pricing, hedging or transferring credit risk.
- Optimize allocation of regulatory capital and economic capital.
Consumer Credit Risk Management
The most important issue today in consumer lending (Credit Card, Mortgage, Home Equity Lines of Credit, Auto Unsecured Loans) is integrating marketing and risk – the struggle between the desire to optimize and the fear of failure.
We offer solutions in specific decision areas, for instance, soliciting new loans. We provide basic portfolio risk profiles (score-based, vintage or campaign based), loan loss forecasting (roll-rate methods, statistical methods), stress testing and scenario analysis. We also have experience in analyzing relationships between macroeconomic and various socio-demographic variables.
Operational Risk
The complex nature of operational risk is due to the dynamic environment in which the risk occurs. This environment includes the interaction of five key areas
- People
- Process
- Systems
- Business strategy
- Business environment
Braintree helps its clients simplify this complex environment, understand and reduce the operational risk applying the best practices and experience of our experts.
We use the basic principles of risk management and help our clients to
- Establish a systematic framework for capturing risk factors and relationships.
- Identity and access operational risk in new and existing products, activities, processes and systems.
- Assess risk exposures and impacts across the entire organization.
Optimize capital reserves by improving the internal control environment.
- Processes to monitor operational risk or losses by senior management and board
- Establish key risk indicators, risk-assessment maps and control-assessment scores.
Over the years we have implemented projects for both Market and Credit Risk.
- VAR modeling using Delta-Gamma, Historical and Monte Carlo methods.
- Implemented Risk Management systems e.g. Risk watch, Summit, Risk Matrices for calculating market risk for Trading Desk.
- Quantified Interest Rate Risk in banking books.
- Implemented various ALM (Asset Liability Management) systems like QRM, Palms and Banc ware for NIM (Net Interest Margin) and MVE (Market Value of Equity) Measurement.
