In today’s capital markets, the issuer seeking funds is at the mercy of the market.  No underwriter can change this condition.  Nonetheless, the capital seeker has certain elements subject to his direct control to understand and focus his own strengths as viewed by significant market participants and thus, to be poised to enter the market under advantageous circumstances. At risk quantification frameworks, we can best serve our clients through proper planning of a financial structure, timely and economical procurement of needed collateral, and diligent preparation of documents to create for the client the only market leverage subject to its direct control, structure and timing.

We take a non-traditional approach to the underwriting business.  Our approach is to assess the investment risks and rewards, then to formulate innovative solutions to capital raising request.  We seek first to understand the key variables of the financing.

We take an active role in the formulation and implementation of the risk quantification frameworks.  This is our key reference point in the pursuit of collateral(s).  Our experience, skills and perspective in understanding client’s needs and market relationships combine to provide successful conclusions.

A six step process is used to shape the RMQ framework:

      • define risks,
      • design risk models,
      • identify relevant industry data and set parameters,
      • test risk models,
      • utilize results from risk model and explore risk appetite alternatives,
      • monitor risk process continually

The Firm’s approach is to focus the financial expertise of our senior underwriters and partners in assessing the collateral requirements to complete a client’s request. If we determine that application of our resources can result in a successful conclusion, or can add value to given situation, we will undertake the assignment. If we determine a particular request is outside the scope of our expertise, we will so advise the client and decline to participate.

What is Risk Management Quantification?

Risk quantification is the process of evaluating the risks that have been identified and developing the data that will be needed for making decisions as to what should be done about them. Risk management is done from very early in the project until the very end. For this reason qualitative analysis should be used at some points in the project, and quantitative techniques should be used at other times.

The objective of quantification is to establish a way of arranging the risks in the order of importance. In most projects there will not be enough time or money to take action against every risk that is identified.

The severity of the risk is a practical measure for quantifying risks. Severity is a combination of the risk probability and the risk impact. In its simplest form the risks can be ranked as high and low severity or possibly high, medium, and low. At the other extreme, the probability of the risk can be a percentage or a decimal value between zero and one, and the impact can be estimated in dollars. When the impact in dollars and the probability in decimal are multiplied together, the result is the quantitative expected value of the risk.

Various statistical techniques such as PERT (program evaluation and review technique), statistical sampling, sensitivity analysis, decision tree analysis, financial ratios, Monte Carlo, and critical chain can all be used to evaluate and quantify risks.