Noetzold & Noetzold

Efficient, Consistent, and Holistic Risk Management Concept

Added Value Approach

Noetzold & Noetzold has developed a concept for gradual development of the clients' risk management systems. The concept focuses on shareholder value, success factors, and process integration. Noetzold & Noetzold offers an extensive portfolio of consulting services and state-of-the-art software solutions, in line with the main three risk processes: Core Risk Process, Advanced Risk Process, Integrated Risk Process.


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Core Risk Process

The core risk process consists of:

  • Identification and quantification of risks, opportunities, risk drivers, measures, correlations (e.g. systematic and consistent asset identification and quantification with experienced risk profilers).
  • Aggregation of risks, opportunities, risk drivers, measures, correlations (e.g. use of professional risk management software based on correct risk models and methods, requires high-performance Monte Carlo simulator).
  • Design risk management organization and processes (e.g. organizational implementation with minimum personnel and efficient process integration).
  • Risk reporting (e.g. consideration of risk bundles and diversification effects, calculation of correct and precise risk results).

Typical questions that will be answered by the core risk process are:

  • What is the risk exposure?
  • What are the costs for risk mitigation?
  • Are all risks being managed and mitigated and is management optimal and suitable?
  • What is the probability to lose planned earnings or liquidity?
  • What is the required economic capital? Is there adequate cover for risk events?
  • What are the values for the key risk indicators (KRI)?

The core risk process establishes the database and the structures for the advanced risk processes.

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Advanced Risk Process

The advanced risk process consists of:

  • Risk controlling (e.g. integration into operational and strategic planning, risk-adjusted Profit and Loss statement, risk results for individual risk portfolios).
  • Risk management (e.g. management / steering under risk-return aspects, optimal resource allocation, portfolio optimization).

Typical questions that will be answered by the advanced risk process are:

  • What is the risk appetite and how does it align with strategy and business plan? What is the optimal risk strategy?
  • How should the resources be allocated and budgeted to optimize the risk-return position? What is the risk-adequate capital budget?
  • How should actionable and acceptable limits be constructed? How should they be broken down the corporate hierarchy?
  • What is the optimal corporate strategy under risk-return aspects? What competitive advantages can be generated?
  • What would be a suitable risk strategy?
  • Is liquidity endangered? Are there potential risk bundles (= correlated risks with simultaneous occurrence and extremely high losses)?
  • How large are the risk-adjusted (planned) P&L positions and how large are possible deviations (uncertainties, volatilities)?

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Integrated Risk Process

The integrated risk process consists of:

  • Integration of risk management into conventional management systems (e.g. integration into liquidity or cash flow management, product management, ALM (asset liability management), credit risk management or claim management, M&A, project management).
  • Integration of risk dimension into the decision-making procceses.
  • Integration of existing individual risk management systems and processes into a coherent enterprise-wide framework.
  • Implementation of an enterprise-wide risk management system.

Typical questions that will be answered by the integrated risk process are:

  • How can risk-return performance measurement and benchmarking support operational and strategic decisions?
  • What is an optimal enterprise-wide allocation and budgeting solution consistent with corporate strategy and risk strategy?.
  • How to make decisions under uncertainty consistent with corporate strategy and risk strategy?

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