Risk management

Risk management is an integral component of the corporate culture at EIF.

Despite EIF pursues European Union policy objectives, it acts commercially under market conditions with the statutory obligation to ensure an appropriate return for its shareholders.

Its businesses require the development of market instruments that entail certain risks. Hence, a risk management mindset permeates all EIF’s business functions and processes.

Thanks to this state of organisational risk awareness and readiness, EIF was able to rapidly increase its response as the financial crisis deepened and spread over the course of 2008. At the level of single transactions, monitoring efforts were stepped up. At the portfolio level, more severe structured stress tests were applied and communicated to EIF’s governing bodies.

The Risk Management and Monitoring (RMM) division reviews and implements new processes and methodologies to access the risk-return profile of EIF’s investment activities.  As part of the new investment proposals process, the RMM division performs an independent analysis of each transaction and issues an opinion to the Investment and Risk Committee. In this context, it reviews credit ratings (portfolio guarantees) and expected performance gradings (private equity) assigned by the front office to these investments.

RMM is responsible for the monitoring of guarantee activities under the European Commission’s mandates. Moreover, RMM performs portfolio reviews for EIF’s private equity investments and guarantee instruments. RMM is under the responsibility of the Deputy Chief Executive, Jean-Marie Magnette, and directly reports to him.