Risk Management

The Board of Directors is responsible for the risk policy. This is implemented by the Executive Board.

Credit and counterpart risks:

  • Credit risks (including changes to ratings)
  • Country risks
  • Settlement risks
  • Cluster risks

PAA Capital Group of Companies are not primarily a financial institution, but instead focuses on providing advice and support to a sophisticated group of natural persons and legal entities. The institution’s lending power is only utilized, however, if this enables client assets to be acquired at the same time.

Only first-class partners are taken into consideration for the processing of transactions.

The institutions only actively offers micro lending and trust loans against readily marketable collateral.

Market risks:

  • Interest rate risks
  • Share price risks
  • Currency risks

The interest margin business is restricted to an absolute minimum within the framework of the overall client relationship. The institution also does offer bonds, medium-term notes or other fixed-interest products.

Depending on its market assessment, the institution holds trading positions in first-class, regularly traded equities or similar instruments in order to enable it to exploit price fluctuations. The trading portfolio exclusively contains equities, funds or index certificates. The positions are assessed and managed on a daily basis.

In general, foreign-exchange positions must be kept as small as possible. The credit business must be matched in the relevant currency or by using suitable currency hedging instruments. No proprietary trading in foreign currencies is currently conducted.

Liquidity risk:

  • Refinancing risk
  • Market liquidity risk

Long-term invested client assets are placed as fiduciary investments with matching maturities. The institution maintains money market lines with suitable counterparts.

Operational and legal risks:

  • Internal fraudulent actions
  • External fraudulent actions
  • Recruitment practices and security at the workplace
  • Clients, products and business practices
  • Damage to tangible assets
  • Business interruptions and system outages
  • Execution, delivery and process management
  • Adviser liability

All of the institutions’s executive bodies must ensure the development and maintenance of a corporate culture which attaches great significance to minimizing risk.

Operational risks in the technical area are kept as low as possible through the extensive outsourcing of IT.

Employees must be trained and receive further training on an ongoing basis in order to maintain and build on their requisite specialist knowledge.

With regard to incentive systems, the remuneration policy must be structured in such a way that conflicts of interest and behavioral risks are minimized.