Getting Grips Counterparty Risk Case Study
Mc. Kinsey Working Paper on Risk- “Getting Grips Counterparty Risk”
This research article describes the repercussions of the Great Depression and collapse of Lehman Brothers in 2008 and almost the whole banking system of US, UK and areas of Europe. The banks came up with many new regulations to overcome the consequences of this crisis and to avoid such events in future and considerably mitigate the credit risk.
However, framing regulations is not a panacea. There are many other factors which help mitigating the counterparty risk. Moreover, new regulations put extra burden on the workings of banks as it requires coping with all new structural changes of those regulations. Thus, there are other better ways to solve this problem. After the 2008 crisis, regulators were rushing to establish the central …show more content…
The board risk committee should focus on many risk areas like risk appetite, liquidity, capital allocation, Enterprise Risk Management, etc. CROs should balance risk management of the business and the needs of regulation.
Accenture Global Risk Management Study- “Risk Management for an Era of Greater Uncertainty"
An organization is expected to suffer approximately around 46% pressure of credit risk of all the external pressures and the top risks which are expected to increase over the next 2 years. Focusing only on framing regulations and legislations including Sarbanes Oxley Act, Basel III, Solvency II in Europe do not alone help in mitigating the credit risk. It rather creates complexity and uncertainty. To cope with such issues, companies should elevate risk management role and integrate it into their corporate strategies.
As per the study of Accenture on Global Risk Management, companies that want to achieve their risk capabilities should consider the following things:
1. Consider risk management as a people game. Risk culture is an important area of developing risk capabilities. The risk professionals should also understand the business and their roles
This research article describes the repercussions of the Great Depression and collapse of Lehman Brothers in 2008 and almost the whole banking system of US, UK and areas of Europe. The banks came up with many new regulations to overcome the consequences of this crisis and to avoid such events in future and considerably mitigate the credit risk.
However, framing regulations is not a panacea. There are many other factors which help mitigating the counterparty risk. Moreover, new regulations put extra burden on the workings of banks as it requires coping with all new structural changes of those regulations. Thus, there are other better ways to solve this problem. After the 2008 crisis, regulators were rushing to establish the central …show more content…
The board risk committee should focus on many risk areas like risk appetite, liquidity, capital allocation, Enterprise Risk Management, etc. CROs should balance risk management of the business and the needs of regulation.
Accenture Global Risk Management Study- “Risk Management for an Era of Greater Uncertainty"
An organization is expected to suffer approximately around 46% pressure of credit risk of all the external pressures and the top risks which are expected to increase over the next 2 years. Focusing only on framing regulations and legislations including Sarbanes Oxley Act, Basel III, Solvency II in Europe do not alone help in mitigating the credit risk. It rather creates complexity and uncertainty. To cope with such issues, companies should elevate risk management role and integrate it into their corporate strategies.
As per the study of Accenture on Global Risk Management, companies that want to achieve their risk capabilities should consider the following things:
1. Consider risk management as a people game. Risk culture is an important area of developing risk capabilities. The risk professionals should also understand the business and their roles