The way that we calculate capital requirements is one of those embedded assumptions that has existed for so long that we fail to think about whether it really makes any sense or not. And if you do stop and take a step back, you will realize that it actually does not necessarily make much sense.
We calculate capital requirements looking backwards, when the thing that we will need capital for is in the future. That backwards capital requirement is only broadly close to being correct for firms th
April 2014 sees the beginning of a new era. An era of consequences, both intended and unintended, heralding a period of increasing centralized power, where understanding the strength of peers will determine success or failure. The month after the latest Comprehensive Capital Analysis Review (CCAR) results, as the Volcker rule becomes law and with single counterparty limits on the horizon, April will also reveal the much-anticipated fourth season of the fantasy HBO series, Game of Thrones (GoT).
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According to a report published by Technology Business Research last week, IT investment among North American banks is on the rise, with one of the main drivers for this being data management. This echoes findings of research SunGard recently conducted into risk management trends and priorities among more than 750 of our banking customers in 60 countries. Over 50% of respondents confirmed that their IT budgets for risk management has increased or remained stable since 2012. In the US, 65% of ban
Today’s banking industry must deal with an evolving regulatory landscape by developing new and innovative strategies for acquiring and optimizing capital. Banks must find a new way to raise capital, maintain a functional capital structure, and continue providing the products and services their customers demand while staying profitable. The new deadline for implementing the Basel III capital requirements makes capital management the most important issue for banks today.
Bogie Ozdemir, Vice Preside
Properly stress testing measures of risk is a complicated activity that few companies have done well. In this blog we take a look at a complete framework for stress testing.
The spreadsheet map can be downloaded from this [LNK]
Earlier on this year, the Bank for International Settlements released a paper which stated directly: "No macro stress test carried out ahead of the crisis identified the build-up of vulnerabilities"
This is a very harsh reality and highlights one of the key areas risk management needs to address. In this article we look at why stress testing risk systems hasn't been working for the banking sector.
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