Counterparty Risk Management Services

Counterparty Risk Management encompasses all aspects of addressing the risks associated with dealing with your fund’s counterparties, whether they are prime brokers, OTC derivatives counterparties, OTC or futures clearers, custody banks or executing brokers.

Geffen Advisors believes that all hedge funds should be incorporating a credit risk assessment into their counterparty selection process, and that once counterparties are selected the counterparty contracts should be carefully negotiated with both business and legal input to provide hedge funds with appropriate protections to mitigate and reduce counterparty risk.  Additionally, Geffen Advisors highly recommends that hedge funds establish processes and procedures for monitoring counterparties for changes in creditworthiness and for measuring and monitoring their counterparty credit exposures.

Geffen Advisors would be interested to discuss the possibility of serving as your firm’s outsourced Credit Department.  If your firm already has a Credit Department, we would welcome the opportunity to partner with your established team to provide any additional required services.  Our firm also provides the following advisory services to hedge funds, tailored in each case to your firm’s specific needs:

  • Counterparty selection
  • Initial counterparty credit assessment
  • Ongoing counterparty credit monitoring
  • Counterparty credit risk measurement
  • Counterparty credit risk reporting to investors
  • Counterparty documentation negotiation
  • Asset protection recommendations
  • Development of CRM policies and procedures
  • Counterparty credit risk training
  • Review of lessons learned from recent firm failures