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Jun 14, 2022

Integrated Market & Credit Risk: An Active Risk Management Dialogue

The economic impact of the COVID-19 pandemic, similar to the 2008 Global Financial Crisis, shows that correlations between market and credit factors tend to be more pronounced in extreme market conditions. In order to respond to, or even stay ahead of such impacts, an integrated approach to market and credit risk analytics is key to success.

Apr 11, 2022

Mitigating Operational Risks in Legacy Systems

Given the prevalence of technology in fund operations today, it’s hard to believe that in the not-too-distant past, a fund administrator’s work product ended up in cardboard boxes stuffed with paper documents, shipped off to a secure storage facility, to be retrieved only in an emergency.

Mar 18, 2022

The Role of Risk Modeling in Volatile Financial Markets

Despite today’s formidable economic challenges, insurers and alternative investment managers must continue to increase and protect yields. Considering the uncertain future of interest rates, geopolitical pressures and other unforgiving economic conditions, insurance portfolio managers may be reassessing and revising investment strategies.

Jul 9, 2021

A late revival of counterparty credit risk modeling

Counterparty Credit Risk (CCR) modeling became popular in the early 2000s as B2 entered into its final phase. Many banks rushed to develop their own approaches or acquire third-party vendor solutions for counterparty credit risk exposure measuring and management. 

Jun 11, 2021

Managing energy risk in the new normal post-COVID-19

The energy sector is as complex as the different forms of energy required to power our modern lives. According to the U.S. Energy Information Administration (EIA),  “The May Short-Term Energy Outlook (STEO) remains subject to heightened levels of uncertainty because responses to COVID-19 continue to evolve. Economic activity has increased significantly after reaching multi-year lows in the second quarter of 2020. The increase in economic activity and easing of COVID-19-related restrictions have contributed to rising energy use.”

May 21, 2021

ETFs: a case for “look-through” data in risk management and beyond

For more than 25 years, exchange-traded funds (ETFs) have transformed the global investment landscape. Born out of US equity market efficiency assumptions and computer advancements, these low-cost investment vehicles are found today in many institutional portfolios. Investors use ETF products well beyond original US equity bounds. These liquid beta instruments seek to replicate performances of international equity indices, commodity indicators and selected fixed-income universes. Considering the continuous growth in assets allocated to ETFs—ESG-tilted ones in particular—this blog looks at some analytics consequences on institutional investors’ asset allocation and risk management processes.

May 13, 2021

Moving to the cloud – it’s a risky business

Technology and IT management have become second nature for many financial firms. There is no shortage of anecdotes from the last decade where C-Suite executives anticipated the changes. One such CEO of a Tier 1 European Bank back in 2015 foretold, "In the future, we will be a software company.” Our view, as a software company, was that we felt confident that there would continue to be a greater reliance on IT infrastructure. The emphasis on infrastructure remains, although the business challenges are evolving.

Apr 29, 2021

Risk management and lessons learned from GameStop

The most important lesson to learn from the recent GameStop event is the importance of risk management. But the point is not to try to forecast such an event. For the most part, GameStop being selected by the public for this wave of buying was more or less a random event. There are thousands of stocks that could have experienced the same thing—in fact, there are large stock price swings every day, just with less volume and publicity. Regardless of whether you are an individual or a large mutual fund, knowing if you have a “GameStop Candidate” in your portfolio is critical.

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