Managing Counterparty Risk in an Unstable Financial System

In "Managing Counterparty Risk," David Belmont, Chief Risk Officer of Commonfund Group, analyzes MF Global, Peregrine Capital, and other counterparty failures, in arguing that the financial system is no safer today than before the credit crisis, as investors continue to incur counterparty losses with alarming frequency. The paper recommends that investors define their counterparty risk strategy at the same time as they execute their investment strategy, and presents in-depth practical steps investors can take in order to minimize losses.