Sophisticated risk management is a core component of our success
CCI’s risk management approach is deeply embedded in our culture, and we consider risk in every decision we make.
Our Risk Management team is critical to the execution of our strategic objectives and our ability to maximize absolute and risk-adjusted returns. Our risk culture is driven by deep integration and close collaboration with the Merchant and Principal Investments teams.
Our Approach
Risk management is a core part of our identity and serves as a foundation for strong financial performance. A disciplined focus on optimal capital allocation, along with pro-active measurement, monitoring, and dynamic management of risk across the platform, is central to our approach.
Capital Allocation
Disciplined capital allocation provides a critical framework for successfully pursuing opportunities across energy commodity markets, while supporting durable, long-term performance. The capital allocation process focuses on optimizing the portfolio subject to skill, diversification contribution and analysis of qualitative characteristics across different strategies.
Advanced Risk Framework and Data Analytics
We invest in the latest analytic and risk management technologies to continuously enhance our risk management analytics. We utilize proprietary risk systems and employ rigorous methodologies to aggregate risk, identifying idiosyncratic risk factors and measuring the degree of diversification across the platform. We continuously review modelled stress scenarios and risk concentrations as market dynamics evolve. This proactive and dynamic approach to tail risk management helps reduce risk concentrations and limit firm-wide exposure.
Independent Risk Oversight
The Risk Management team is independent from our Merchant and Principal Investments teams and reports directly to the CEO. The team consists of market experts and dedicated analysts creating custom tools to bolster risk analytics. Pre-deal and intra-deal discussions serve to increase transparency regarding the distribution of potential outcomes and provide analysis during changing market conditions. Ex-post analysis is used to evaluate the performance and skill of individual risk takers, while also identifying opportunities that inform and enhance the capital allocation process.
Firmwide Risk Culture
Synthesizing quantitative and qualitative performance metrics is key to maximizing returns and achieving sustainable, long-term value creation. The Risk Management team independently evaluates qualitative performance metrics, including the quality of the idea generation process and the ability of risk takers to construct portfolios with asymmetric payoffs, manage risk and deploy/redeploy risk capital responsibly and effectively. Identifying gaps in these areas, working to improve the gaps and sharing best practices across the firm ensures that there is a culture of excellence and accountability.
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