NKD Group

S E C T I O N S

Enterprise Risk Modeling (ERM)

The ERM (enterprise risk modeling) division brings together leading academics and respected market practitioners across a number of risk-analytic fields.  With a focus on ethics, team-building and practical experience we are able to offer clients discretion, confidentiality and personalized attention to the managerial economics that define complex risk management.  You will find our senior consultants are with you from the start to the completion of our projects.  The successful completion of your project is at the heart of our approach.

 

Our Focus...

The NKD Group’s ERM division is focused on all aspects of modeling integrated risk management platforms.  Our firm specializes in two industries: depository institutions (banking) and alternative asset trading industries – hedge funds.

What we do...

  • ALM with nonlinear hierarchical structure
  • Financial Analysis Software: the WinORSai System
  • Research Investigations: designed applications of quantitative methods to your firm’s data.
  • Executive Training: expert in-house training for executives and business professionals

What Risks do we measure?...

Exactly what you would expect:

Operational risk – the risk of financial loss that may attributed to the under-investment in technological systems and controls.  This area of risk management also requires attention to both regulatory and business risk. 

  • Regulatory risk is a legal risk that arises from a change in the external business environment.  Our models explicitly treat tax, governance, and financial innovation regulations (e.g., Sarbanes-Oxley – (SOX).
  • Business risk is more directly related to changes, expected or not, in economic variables. This risk has a direct bearing on firm value by its impact on ALM valuation.  The NKD Group models explicitly incorporate the uncertainty brought to the decision-making environment by the unexpected changes that can have a meaningful impact on reported firm values.

Market risk - the risk of earnings volatility and its impact on the firm valuation is of principal concern to contemporary decision-makers. Our risk models are fully capable of developing risk mitigation strategies for any expected deterioration in firm capitalization values owing to downside volatility arising from market risk.

  • Money Market Instruments
  • Fixed Income Instruments
  • Equity
  • Foreign Exchange
  • Hedge Funds and Fund of Funds

Credit Risk - changes in a counterparty’s credit quality can have a dramatic impact on the probability of a successful completion of a contractual obligation.

Regulatory Risk - Under Basel II sophisticated financial institutions are able to use internal methods to calculate operational risk.  The NKD Group works with enterprises to model and improve their internal risk measurement and modeling systems with a focus intent on optimizing capital requirements.

Solvency II - To the insurance industry Solvency II is every bit as encompassing as Basel II.  Solvency II is differentiated by its focus on the significant insurance liability risk that insurers bear. The NKD Group is capable of building sophisticated NLGP models of the insurer business cycle to assess the required levels of capital.

Accounting Risk - The internal accounting function of the firm measures performance for all business units.  Accounting risk arises when inappropriate accounting methods could result in financial losses to the firm.  We assist the client in the application of all derivatives-based accounting.

Portfolio Management of Credit Risk - The NKD Group determines your institutions overall credit exposure by examining exposures at the portfolio level.  Our complex models can handle diversification by: customer; economic sector; country/region; currency; and investment classification.

 

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