Origins of Canadian Banking
The financial crisis of 2007-2008 triggered a worldwide recession. The American and European banking systems experienced massive losses, takeovers, and taxpayer-funded bailouts. Lehman Brothers, Northern Rock, European debt crisis, … and the after-effects are still being felt. Canada’s banking system did have some shaky moments, as a recently published analysis of its asset-backed commercial paper (ABCP) predicament showed. On the whole, however, Canada’s banks withstood the financial crisis relatively well and the financial system maintained its liquidity, solvency, and profitability. The history of the divergence in the Canadian and American banking systems is recounted in a new book. From […]
New Dynamics in Energy Sector
How can financial risk be measured and managed in a volatile industry such as the energy sector? What are some of the common industry challenges? Due to low commodity prices and technological changes in the industry, there are new dynamics in the handling of financial risk management in the energy sector. Three speakers addressed specific changes in a webinar sponsored by the Global Association of Risk Professionals on November 29, 2017. “Sometimes the things we think we know, we don’t,” said Gordon Goodman of NRG Energy, the first of three speakers at the webinar. Goodman’s claim to fame is publication […]
“A Series of Deals, Lost 18 Times”
“This book is about a black swan event that turned out to be the largest restructuring in Canadian history,” the moderator Marlene Puffer said as she welcomed dozens of people to a breakfast book launch, held at the Rotman School of Management, University of Toronto on November 9, 2016. In financial markets, the year 2007-8 was a precarious time—“things could have gone either way,” she noted. Ultimately, there was a happy ending: the value of billions of dollars of asset-backed commercial paper (ABCP) in Canada was preserved and most investors were made whole. “This is the book that tells the […]
Clash of Titans
In the wake of the financial crisis, the two Titans that create accounting standards tried to hammer out agreement over how to account for impairment of loans. These bodies are the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB). “FASB and IASB share the same goal but unfortunately were not able to agree on the same standard,” said Emil Lopez, Director of Risk Measurement at Moody’s Analytics. FASB calls their impairment standard “current expected credit losses” (CECL) whereas IASB deals with impairment and expected losses in their International Financial Reporting Standards as IFRS 9. Lopez was […]
Move Beyond Spreadsheets
Is your firm ready? Financial institutions are seeking answers that will help them plan a roadmap for implementation of the new current expected credit losses (CECL) standard issued by the Financial Accounting Standards Board (FASB). “The runway looks long but firms need to start to prepare now,” said Anna Krayn, Team Lead for Impairment, Capital Planning and Stress Testing at Moody’s Analytics. She was the second of three panellists at the webinar “The Long Road to CECL” sponsored by the Global Association of Risk Professionals on September 8, 2016. “Now is the time to educate, organize and govern, quantify, and […]
Long Road, Many Challenges
Nothing like a financial crisis to show the rough spots in estimation of losses. “Credit losses weren’t being recognized on a timely basis,” and the impairment accounting models were complex and varied widely, according to Kevin Guckian, Partner, National Professional Practice at Ernst &Young. He was the first of three panellists at the webinar “The Long Road to CECL” sponsored by the Global Association of Risk Professionals on September 8, 2016. “FASB’s final standard should accelerate recognition of credit losses,” Guckian noted, referring to the current expected credit losses (CECL) standard newly adopted by the Financial Accounting Standards Board. He […]
“Tons of Models, Tons of Variables”
With so many economic variables, and such a wide choice of parameters, do you feel overwhelmed by the task of producing the best financial model possible? Is there a systematic approach to exploring models? “Ever since the 2008 financial crisis, there’s been a focus on stress testing,” which requires robust financial models, said Roderick Powell, Director of Market and Treasury Risk at the consulting company KPMG. He was the first of three panellists at the October 27, 2015, webinar on Effective Risk Models Using Machine Intelligence sponsored by the Global Association of Risk Professionals. “Building those models is a time-consuming, […]
3 Steps to Liquidity Compliance
Are you scrambling to adjust to new reporting expectations for liquidity risk? Getting good data is key, but “you have to get it right and on time,” said Pierre Mesnard, Director Solutions Specialist at Moody’s Analytics. He was the third of three presenters on liquidity risk compliance at a webinar on June 25, 2015, sponsored by the Global Association of Risk Professionals. Once you have the data, there are three steps to delivering integrated liquidity compliance and business management, said Mesnard. First, you must ensure all financial instruments at your bank can be adequately modelled in order to generate realistic […]
Liquidity: A Change in Governance
Have you noticed that financial risk managers talk and think differently about liquidity risk, compared to pre-crisis days? The 2007-08 financial crisis was a watershed in the evolution of liquidity management, according to Nicolas Kunghehian, Director Solutions Specialist at Moody’s Analytics. He was the second of three presenters on liquidity risk compliance at a webinar on June 25, 2015, sponsored by the Global Association of Risk Professionals. “Before the crisis, there was only one team dedicated to monitoring and managing liquidity,” Kunghehian said. Liquidity risk was assumed to be small, and the Treasury department was chiefly fine-tuning the profit and […]
An Opportunity To Get Things Right
When it comes to forecasting liquidity risk, does your bank follow best practices? It might be tough to do so, because of a “data conundrum,” said Gudni Adalsteinsson, author of The Liquidity Risk Management Guide – from Policy to Pitfalls. Banks carry out a “retrospective analysis” on data that is “not forward looking.” Adalsteinsson, Head of Global Liquidity, Group Treasury at Legal & General Group Plc, was the first of three presenters on liquidity risk compliance, at a webinar on June 25, 2015, sponsored by the Global Association of Risk Professionals. He praised the Basel III regulation on liquidity risk. […]