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 […]
Effective Risk Reporting
Effective risk reporting means “having the intelligence at your fingertips but exercising the judgment to report only what your company needs,” said Elizabeth Abraham, Director of Professional Services at MetricStream, and the second of two presenters at the June 16, 2015, webinar on Effective Risk Reporting sponsored by the Global Association of Risk Professionals. “Lack of clarity about the reporting objective” is a common barrier to effective enterprise risk management reporting, she said. Make sure you understand what level of information the audience wants. “Data model inconsistencies can lead to an inability to aggregate” the risk estimates, and that’s another […]
One Size Does Not Fit All
When it comes to risk reporting, do you ever feel that you are trying to push a square peg into a round hole? According to Gordon Goodman, that may happen rather often for companies that are not in the finance industry. Goodman, Director of Governance and Enterprise Risk Management at NRG Energy, was the first of two presenters at the June 16, 2015, webinar on Effective Risk Reporting sponsored by the Global Association of Risk Professionals. According to Goodman, there has been a push by banks to “bring their metrics to the marketplace, but this has created problems” for non-financial […]
Four Lessons from Stress Testing Exercise
“It very quickly became apparent that this was not a one- or two-month exercise,” said Charyn Faenza, Vice President, Manager of Corporate Business Intelligence Systems at First National Bank, the largest subsidiary of the largest subsidiary of FNB Corporation. She was the second of two presenters at the May 19, 2015, webinar on Stress Testing Modeling sponsored by the Global Association of Risk Professionals. Faenza was referring to her bank’s experience as an example of a “DFAST 10-50” bank that is required to conduct an annual stress test. She drew four important lessons from the exercise. Good Modeling Requires Good […]
Swaps, Before & After
“Historically, there were few, if any, regulatory requirements on swaps … it was effectively an unsecured loan,” said James Schwartz, Of Counsel at Morrison & Foerster. He was the fourth and final presenter at the Derivatives Regulatory Update webinar held on March 31, 2015, sponsored by the Global Association of Risk Professionals. Prior to the Dodd-Frank Act, swaps dealers were self-regulated through the trade association International Swaps and Derivatives Association (ISDA). “It was typical for the two parties to accept a certain amount of uncollateralized exposure to each other in the form of a threshold that varied according to their […]
Update on Central Clearing
One of the goals of the Dodd-Frank Act is to mitigate systemic financial risk by establishing a central clearinghouse for derivatives. But how close is the financial community toward achieving that goal? “Many swaps were not collateralized prior to Dodd-Frank,” said Julian E. Hammar, Of Counsel at Morrison & Foerster. Hammar was the third of four presenters at the Derivatives Regulatory Update webinar held on March 31, 2015, sponsored by the Global Association of Risk Professionals. Clearing swaps mitigates risk not just through requiring margin collateral (and thereby reducing) credit risk. It also imposes an “operational discipline” Hammar said, with […]
“Skin in the Game”
What safeguards should be in place, to minimize the risks posed by financial derivatives? CME Group requires that its Clearing Members support the risk of their portfolios by “putting some skin in the game,” said Jason Silverstein, Executive Director and Associate General Counsel of CME Group, a body that includes the Chicago Mercantile Exchange and the New York Mercantile Exchange among its subsidiaries. “It’s a story of balancing incentives, in order to stabilize losses. Our belief is that it should be significant and risk-based.” Silverstein was the second of four presenters at a webinar titled Derivatives Regulatory Update held on […]
Towards Reducing Systemic Risk
Have the risks posed by financial derivatives in the context of the current, still evolving, regulatory landscape been properly addressed? Michael Piracci, Director of PCB Compliance at Barclays, said that nowadays he has “a lot of interactions day-to-day with the clearinghouse” and overall, “it makes me feel a little more comfortable there’s a good system in place.” Piracci was the first of four presenters at a webinar titled Derivatives Regulatory Update held on March 31, 2015, sponsored by the Global Association of Risk Professionals. Piracci began by explaining the role of the Central Counterparty (CCP) and the Futures Commission Merchants […]
Alternative Mutual Funds 3
“I can’t stress enough: Boards are now being asked to look at things in great detail,” said Kathleen Moriarty, Partner at Katten Muchin Rosenman LLP. “We spend a lot of time educating the Board,” she said, referring to the Board of Directors of alternative mutual funds. It’s simply that the Board is required to understand the fund at a deeper level than ever before. Moriarty was the third of three speakers at a GARP-sponsored webinar on Alternative Mutual Funds: Risk Governance Under SEC Security on February 17, 2015. She described a recent instance of going over the legislation on mutual […]
Alternative Mutual Funds 2
“SEC’s mission is to protect investors and support responsible capital formation,” said Raymond Slezak, Assistant Regional Director at the Securities and Exchange Commission (SEC). He was the second of three presenters at the GARP-sponsored webinar held February 17, 2015, on Alternative Mutual Funds: Risk Governance Under SEC Security. Liquid alternative mutual funds were “listed as a priority” as early as 2013, he said, because “any time there’s rapid growth” or “concern about the dynamics of money managers moving into an area,” it attracts SEC interest. As a metaphor about the regulatory thought about the new funds, Slezak repeated a quotation […]