Financial Risk Management
that works for You

FinMetrics has more than 10 years experience as an advisor on specialized financial topics and their implementation:

 

This is possible thanks to our global experience and strong financial background linked to practical IT solutions.

 

Project Valuation


From the early times of the discounted cash flows analysis (DCF), the universe of tools available to project financial deciders has somewhat grown up, even if they are still build on the same fundamental base during the last 50 years. From the preoccupation of defining the real cost of capital that the firm must apply to some project up to the use of simulation and the real option terminology to characterize more complex project paths, many ingredients and specific cases may be integrated and developed when applying the theory to practice. 		Illustration
 
 
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Derivative Valuation and Structured Products


From the ancient times, the market has always tried to predict the future. What a remarkable advance that one brought by derivatives that allow the investor not to predict but to reduce uncertainty by the mean of "moving" risks among counterparts. Of course, even if prices cannot be predicted with certainty, the financial world is not chaotic (in some cases, this may sound presumptuous) and we have tools from modern statistics that allow us to measure the magnitude of uncertainty. The market may be sometimes over- or under-valuing the price of insurance or hedging but besides that, the investor will have replaced a risk by an opportunity cost. Ex-post, we may find the trade-off not very fair but ex-ante, that was the best trade-off to get rid of risk.
 
 

Risk Management


Risk management may be seen as the envelope of all other financial subjects since it deals with techniques, financial products, strategies, calculations of exposures, reporting on real net exposure, combinations of strategies and products and such an activity may be related to an industrial activity what therefore relates it to project and firm valuation. With the increasing will to share responsibilities among all contributors at all decisional levels of the firm, risk is now a word of mouth. But fashion conveys a problem: everybody may well have heard about the jargon of risk management but it is less than certain that people actually manages it. 		Illustration
 
 
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Performance Measurement


How frequently do we hear about performance as being represented by returns? Measuring performance in a dynamic portfolio for the bank and/or for the client and trying to get a consistent measure accross all types of investments is a great odyssey. Typical matters include also: the communication of performance results to the clientele (or when the bank has to find some trade-off between the precision of the measure and the communicability of the meaning of it), the introduction of non-linear and past-dependent products, performance attribution and the added-value of management, etc..
 
 

Financial Reporting Design


The new recommendations of the Basle II Accord as well at the new IAS regulation are clear signs of an expansion of regulatory authorities' practices. But how far can we consent high investments just for the sake of external reporting? Such investments in systems, data integration and reporting capacities are too far from human judgment if the firm fails into using that information for its own direction. We can clearly identify two kinds of problems that the firm will have to deal with:
1) Lack of clear and robust guidelines. Those who have been trying to get IAS compliance in their activity know what we are talking about. The firm must be creative and persuasive to get a "firm" commitment (if that may happen someday) about the way the firm is reporting on their exposures, hedge strategies, etc..
2) Asking for "awareness" of all managers of an institution (as well as for the external auditors) without clearly understanding the scope of that responsibility, may ultimately lead people to over-reporting and to pass the buck over for whatever could be still missing without yet a guaranty that the report is really adequate for the activity. Too high sanctions without a clear relationship between what drives the responsibility of one person will undoubtedly generate a complete deny of responsibility, the auditor asking for all necessary discharges and/or paying extremely expensive insurances. Will that increase education, knowledge and moral responsibility? Is that the initial desire of regulators? Because otherwise this would sound like building more jails while stopping financing education. 		Illustration