Risk Integrated, a New York-based consulting and technology firm focusing on risk management for specialized finance, has expanded the capabilities of its Specialized Finance System (SFS) by adding cashflow analysis for the use of property derivatives in commercial real estate (CRE) lending.
Risk Integrated says it is the first organization to provide risk-measurement tools for property derivatives – enabling investors and lenders to hedge risk exposure and help stabilize CRE assets.
The inclusion of property derivatives into the risk-management system provides CRE professionals with a deep insight into how property derivatives can be used within a transaction to improve the risk profile. Doing so allows investors and lenders to quantify the value of these derivatives in reducing the risk of the deal and judge whether the reduction in risk is worth the expense of the instrument.
The SFS uses simulation to analyze market volatility and stresses, incorporating options-pricing theory to quantify the year by year risk in real estate transactions. The technology is available either as an in-house installation or as a service running across the Web.
