Structural Risk Mitigation & Transfer

Our approach integrates structuring and risk mitigation strategies with the specialised intelligence and risk-sharing capabilities of our partners. The objective is to facilitate an effective risk transfer concerning operational, third-party, and, where applicable, construction and pre-operational elements of projects or business operations.
Comprehensive Risk Transfer:
- We aim to transfer risks associated with operational facets, third-party engagements, and pre-operational undertakings effectively. This enables us to safeguard against potential financial fluctuations and uncertainties.
Holistic Insurance Mechanisms:
- Our strategy ensures a consistent financial outcome from projects or business operations by insuring both the buying and selling sides, as well as operational aspects. This comprehensive coverage enhances the stability and predictability of EBITDA (Earnings Before Interest, Tax, Depreciation, and Amortisation).
 Cost-Effectiveness:
- By implementing this integrated risk management framework, we provide a cost-effective solution that not only protects the project’s financial viability but also optimises the overall risk management process.

Through the synergy of LERM structuring and the expertise of our partners, we create a fortified approach to managing and mitigating risks. Our goal is to ensure that project stakeholders can operate with confidence, knowing that they are insulated from potential adverse impacts that could affect financial performance.
LERM, together with its partner insurance companies, Lloyd’s of London and derivative counterparties, has developed a comprehensive suite of interconnected risk mitigants and transfers designed to address and mitigate both known and unknown risks related to the client's buying, operational, and selling processes. This innovative approach not only safeguards the project's interests but also transforms potential business risks into manageable credit risks at the EBITDA level. By implementing this umbrella of coverage, stakeholders can ensure greater financial stability and certainty throughout the lifecycle, allowing for more strategic decision-making and investment confidence.

Business Revenues and Principal Guarantees

By utilising proprietary techniques combined with limited market products, LERM offers structured interest and principal risk transfers (IRT/PRT) that aim to lower regulatory risk weights and enhance the credit profiles of various entities, including corporates, sponsors, and regulated lenders.

Here’s a brief summary of how LERM’s offerings work and their benefits:
Risk Transfer Mechanism:
LERM focuses on transferring the risk of default, rather than the actual event of default. This distinction is crucial for maintaining the financial integrity of the parties involved.
Principal and Revenue Guarantees:
Through agreements with third-party providers or preferred financial institutions, LERM structures guarantees that provide enhanced protection for stakeholders' investments.
Improving Credit Metrics:
By reducing risk weights (RW), probability of default (PD), and loss given default (LGD), LERM improves the overall credit standing of corporations and sponsors, which can lower borrowing costs and enhance investment attractiveness.
Investment Grade Counterparties:
The emphasis on securing 100% principal protection from investment-grade counterparties provides an added layer of security, ensuring that stakeholders have robust protection against potential losses.

Cost Optimisation:
LERM's solutions not only protect against risks but also optimise the costs associated with business, debt, and equity, making them appealing options for financial institutions and enterprises in search of improved performance.
Benefits:
Enhanced Financial Stability: Organisations can achieve a more resilient balance sheet through sophisticated risk management strategies.
Cost Efficiency:
Firms can optimise their financing costs thanks to the improved risk profiles resulting from LERM's offerings.
Greater Investment Assurance: Investors and stakeholders can have increased confidence knowing their principal investments are safeguarded against various risks.

LERM’s approach caters to a diverse range of clients looking to manage risks effectively while also optimising their financial structures. In a volatile market, such strategies can be invaluable for maintaining competitiveness and securing investment viability.