Risk management in uncertain environments: hedging and risk allocation

What it is about

Yamileh García de Kuhnert, Executive Director of Primma Advisors, presented at the Fourth Annual Risk Conference (September 16, 2026) why risk does not disappear but is allocated, and what the Dominican market needs to manage it better.

The 18 slides start from the role of financial markets in development, show the recent growth of the local market and its low global integration, use exchange rate volatility as an example of what is missing in hedging and depth, and compare the path followed by Mexico, Colombia and Brazil. They then explain risk governance before and after the transaction and close with reflections from a market maker and three conditions for turning risk into growth.

Objectives

• Relate the efficiency of capital allocation to economic growth.
• Diagnose the depth, liquidity and hedging gaps of the Dominican market.
• Propose a risk governance that closes the loop between before and after the investment decision.

Key takeaways

1. Corporate bonds and funds grew to six times more relative to GDP between 2015 and 2025, and bank assets reached 51% of GDP, against 42% in 2015.
2. The volatility of the peso against the dollar rose from 38 to 173 basis points (about 4.6 times); the bid-offer spread is 40 to 50 basis points, against 5 to 15 in emerging markets.
3. Having domestic investors is an important base but does not guarantee resilience: this depends on diversifying the investor base and the hedging markets.
4. Management starts before the transaction, with appetite, policies, limits and a risk budget, and closes afterwards with measurement, stress tests and a return to the board.
5. The three closing conditions are market structure (depth, liquidity and instruments), organizational governance and market timing, because the window is not always open.