Capital is one of the key resources of any business entity and its effective management should be one of the entities’ core functions.  Few decisions have as direct an impact on value creation (and sometimes, on the very firm's survival) as capital adequacy.  Yet, as recent events have demonstrated, even the most advanced financial institutions, with sophisticated risk-management and capital management functions had been caught unprepared.  What happened?

We believe that the answer is in over-reliance on statistical tools and under-reliance on common sense.  Risk-management systems have become so complicated and so opaque, that the senior executives who were supposed to make informed decisions, lost the forest for the trees.  The decisions on how much capital to hold, in what form, and how to apply it across different opportunities are balancing acts involving vital interests of multiple internal and external constituencies.  Analytical tools can and should help, but only when they are used within a clear strategic framework, well understood, and applied proactively.

We assist companies, both financial and non-financial, in setting up an effective and transparent capital management framework which links directly to expected value creation.