The Changing Face of Risk Management in the New Regulatory Environment
The recovery from the global recession has become especially precarious due to the Eurozone sovereign debt crisis and fiscal tightening in the western world, and as a result of which volatility in financial markets has risen sharply.
The fallout from the financial crisis is that banks have been inundated with a wave of onerous regulations. A range of new metrics for the trading book have been introduced, such as Stressed VaR, Incremental Risk Charge (IRC), Comprehensive Risk Measure (CRM) and Stressed EPE, which necessitate the acquisition of high-quality data scarcely available for many product classes.
Under these circumstances, it has become imperative for banks to strengthen their risk management frameworks so that they can meet both the current and impending wave of challenges successfully.
This report, based on a survey of 46 respondents from 31 universal banks, explores the challenges financial institutions are facing in the new regulatory environment and how they are being met.
The analysis is broken down into the following sections:
- Risk analysis and monitoring frequency
- Risk data warehousing strategies
- Stress testing
- An up-to-date, enterprise view of risk
- Alignment between Risk, IT and the Business