The PWG Principles call upon the key counterparties to commit resources and maintain policies and procedures consistent with best practices for counterparty risk management. These policies and procedures relate to due diligence; exposure measurement, including stress testing; and margin requirements and other credit terms.
There should be a strong correlation between the information held by a counterparty about a hedge fund's risk profile and the terms on which credit is extended. The principles indicate that counterparties should seek quantitative and qualitative indicators of a fund's exposures to market and credit risk and its vulnerabilities to liquidity pressures from counterparties and investors.