Risk Management

New attitudes to liquidity risk management

There are several key areas that banks should consider when solving their liquidity risk optimization challenges. To effectively manage liquidity risk, banks need the right strategy, solution architecture and IT systems – plus management to manage the process. Banks can use the same investment to simultaneously strengthen their risk management systems and further realize business …

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CECL: Are US banks ready?

Experiences from IFRS 9 To put these CECL challenges in perspective, it may be helpful to look at what happened outside the United States. In the rest of the world, IFRS 9 is the global standard issued by the International Accounting Standards Board to tackle expected credit statements. It was completed and published in 2014, …

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Scenario stress test: In addition to compliance with the law

The well-choreographed steps to compliance Scenario stress testing has evolved as a tool for banking supervision after the recent financial crisis, and financial institutions have since incorporated these regulatory exercises into their business as usual. The exercises usually start on a pre-planned date with the release of a known number of supervision scenarios and a …

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RegCap vs. E-Cap: Getting it right

Stress testing gives regulators a view of capital planning Risk research and quantitative solutions In one of our earlier articles for risk insights (see Venture capital and lessons from Titanic), we explain financial (or venture capital) compared to regulatory capital (RegCap) and available capital or capital available. In this article, we plan to take a …

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The banks have to pilot themselves through the model launch

Model risk is inevitable The problem is, models per Definition is simplifications of reality. As British mathematician George E.P. Box pointed out, “Essentially, all models are wrong, but some are useful.” The risk of model-supported decisions is divided into two areas: Does the model provide inaccurate output? Is the model abused? This can be a …

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