Risk Measurement

Basel III, Solvency II, Dodd-Frank and European Market Infrastructure Regulation (EMIR) are some of the new regulations that are forcing organizations to rethink their current risk measurement solutions and infrastructure. These new regulations are pushing risk management initiatives to the forefront of many organizations' technology plans.

FINCAD'S Risk Measurement Solutions

FINCAD provides solutions that can assist with your risk measurement projects. We have successfully helped organizations with:

Portfolio Risk

Organizations require both a high-level view of the firm's risk and a detailed, trade-level view. FINCAD provides the flexibility to meet this challenge. Our powerful analytics platform provides you with comprehensive portfolio-level analytics for accurate portfolio visibility. In addition, FINCAD's solution is built on a generic architecture so you can model the most complex deals, gain computational efficiencies for better calculation performance and integrate with existing systems quickly and easily. Read more

Sensitivities and Hedging

Trading and managing portfolio risk has changed significantly for buy-side and sell-side market participants in light of new market advances and regulatory pressures. FINCAD provides you with the sensitivity information you need for effective hedging and risk measurement. With our patent-pending technology, Universal Risk Technology™, you get risk sensitivities to all market data points and hedging notionals required so you can mitigate risk exposures–giving you complete transparency into your portfolio and the critical information needed to make informed decisions. Read more

Stress Testing and Scenario Analysis

The ability to stress trading positions by numerous market factors is a critical need in today's markets and is an essential component of effective risk measurement. FINCAD provides you with the stress testing and scenario analysis capabilities that you need. Our solutions are flexible enough so you can create user-defined scenarios as well as viewing exposures for non-standard time horizons, giving you far more precise visibility into your portfolio. In addition, the flexible architecture in our solutions mean you can price both vanilla and complex instruments so they can be included in your risk analysis–now you can have a complete view of your portfolio's risk so you can make the right decisions. Read more

Types of Risk Measurement
Market Risk Market risk is the change in the value of your portfolio due to changes in the underlying parameters of the security. This can include stock price, interest rate curve changes, and commodity price changes to name a few. Some methods used to determine the market risk of the portfolio including stress testing, scenario analysis and Value-at-Risk.
Credit Risk Credit risk is the likelihood of a loss occurring in the portfolio due to changes in credit quality of the counterparty(s). An example of this is when the counterparty to an asset you are holding has an increased chance of defaulting. Some organizations manage credit risk by calculating credit value adjustments (CVA) or asking for collateral to be posted.
Liquidity Risk Liquidity risk is very important for organizations as they try to meet current and future demands. Liquidity risk is primarily managed through asset liability management procedures that are set out by organizations.
Operational Risk Operational risk is the risk due to failings of internal controls. This can lead to financial losses arising from errors, fraud or delays in performance. An example, is a spreadsheet being used for valuation or risk management purposes and an error is made in the model being used. If there are no controls in place, this error will lead to under/overestimation of risk and financial losses.

Contact a FINCAD representative to learn more about our pricing and valuations solutions or request a customized demonstration.

Risk Measurement - FINCAD Solutions
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