Our Specialization: Cyber SPIs

Derivtion was the first to create Structured Protection Instruments (SPIs) that pay out when an event meeting the prerequisites of our agreement occur. These payments can be structured to exceed one billion USD. Derivtion provides your organization with immediate and substantial renumeration when an event occurs to enable your organization to act prudently to protect itself against the most dangerous forms of operational risk. Our SPIs have been developed with an eye toward enabling direct offsets to Regulatory Capital requirements. Our Cyber SPIs provide protection against the following Basel III framework compliant event descriptors.

Actions of people—action, or lack of action, taken by people either deliberately or accidentally that impact cyber security.

Systems and technology failures—failure of hardware, software, and information systems.

Failed internal processes—problems in the internal business processes that impact the ability to implement, manage, and sustain cyber security, such as process design, execution, and control.

External events—issues often outside the control of the organization, such as disasters, legal issues, business issues, and service provider dependencies.

Regulatory Capital Offsets

Basel III operational risk are defined as the risk of loss resulting from people, inadequate or failed internal processes and systems, or from external events. This includes legal risk but excludes strategic and reputational risk. The risk of loss resulting from people includes, for example, operational risk events relating specifically to internal or external fraud, non-adherence to internal procedures/values/objectives, or unethical behaviour more broadly. Risk exposure relating to external events and that stems from coverage sold by insurers to third parties is excluded, while risk on an insurer’s own operations is considered within scope.

We have develop our SPIs to address the guideline's provision that enables the transference of specific risks, that can then be excluded from regulatory capital computations. The imputed cost of capital effect of our SPIs when targeting regulatory capital relief is principally driven by the credit quality of the SPI.

Similar to structures that typically involve writing partial guarantees for selected assets on balance sheets to enable regulatory capital relief through bespoke securitisations, Derivtion provides instruments that essentially securitize certain operational risks.

Our Team

Derivtion is focused on understanding how to enable tools that effectively protect organizations from the effects of operational risk. By having the deepest possible understanding of the regulatory requirements and financial markets, and translating that understanding into great products and lasting partnerships with our global client base, we've built a distinct track record of success. Our leadership team has done this for more than 40 years by having great people operate in a culture of truth and transparency.

Insight

Derivtion provides organizations with prudent approaches to financially protect against the unknowable. Our engagement with your organization will provide you with insights that will help your team grasp how to approach the many accumulating hazards associated with operational risk. Please reach out to us to schedule a workshop where we can help you better understand the landscape of opportunity we can deliver.