Risk management is an integral component of corporate culture at EIF. Our activity requires the development of market instruments that entail certain risks.
A risk management mindset is a characteristic that guides all our business functions and processes. The Risk Management and Monitoring (RMM) division is responsible for reviewing and facilitating the implementation of new processes and methodologies to manage the risk-return profile of the Fund’s existing and new investment activities.
As part of the new investment proposals process, the RMM division performs an independent analysis of each transaction and issues an opinion to the Investment and Risk Committee. In this context, it reviews credit ratings (portfolio guarantees) and expected performance gradings (private equity) assigned by the front office to these investments.
RMM is responsible for the monitoring of guarantee activities under the European Commission’s mandates. Moreover, RMM performs portfolio reviews for our private equity investments and guarantee products.
This risk awareness and readiness, enabled us to rapidly respond to the financial crisis, that deepened and spread over the course of 2008. At the level of single transactions, we stepped up monitoring efforts. At the portfolio level, we applied and communicated to our governing bodies more severe structured stress tests.