Insights
Cascading Risks and the Need for a Holistic Approach
In today’s interconnected financial environment, institutions operate with sophisticated operational risk databases and state-of-the-art cyber defenses. Yet the real challenge lies not merely in detecting threats, but in understanding…
Cascading Risks and the Need for a Holistic Approach
In today’s interconnected financial environment, institutions operate with sophisticated operational risk databases and state-of-the-art cyber defenses. Yet the real challenge lies not merely in detecting threats, but in understanding…
Remember the Downside: Rethinking CLO Risk
CLO tranches are gaining substantial shares in investment portfolios, but their significant downgrade risk is often underestimated. It is therefore critical to implement a more dynamic approach to risk…
Rapid Stress Tests: A Solution for Quantifying the Impact of Tariff-Induced Volatility
Comprehensive scenario analysis, fueled by fast, top-down stress tests, can enable firms to project the effects of trade wars quantitatively – not just by estimating near-term recession probabilities but…
Striving for Stability Amid a Perfect Storm: How to Align Risk, Lending and Investing
Recent abrupt changes in U.S. economic policies have sent shockwaves across both equity and credit markets, affecting both private and public sectors. The corporate debt and U.S. leveraged loan…
How to Make Stress Tests More Constructive and Informative
The Federal Reserve is emphasizing a more transparent approach to its supervisory stress testing, via its 2025 Comprehensive Capital Analysis and Review (CCAR). However, despite the Fed’s aim for increased transparency,…
Integrating AI and Human Expertise in Strategic Risk Management – the Cyborg Approach
There are many developments concerning AI products that rattle the markets such as DeepSeek unveiling, , allegations of cheating, intense competition over AI platform performance, and a surge in…
Tokenization: Benefits and Risks
Tokenization has the potential to revolutionize markets, primarily through the application of blockchain technology. It allows assets – particularly high-value ones like real estate, art, and company shares –…
How to Identify and Mitigate Hidden Risk Concentrations
Both financial institutions and their regulators must deal with risk concentrations. They come in two types: observable and hidden. To manage these concentrations, banks set risk limits on various…
The Cash Management Impact of the Fed’s Rate Cut: How to Minimize Risk and Maximize Return
Now that the Federal Reserve has started cutting interest rates, the shape of the yield curve is going to change – and cash management strategies must be reviewed. Cash management…
The Risk and Return Profile of Index-Linked Annuities: How to Build the Optimal Portfolio
Complex financial products like registered index-linked annuities (RILAs) feature an array of risks and benefits. Evaluating all possible outcomes is essential to developing an optimal long-term RILA investment strategy…
What just happened in world capital markets? – Short-term Turbulence vs. Long-term Consequences
We’ve seen extreme turbulence in the markets over the last week. The Interbank Rate in Japan averaged 0.10 percent from 2014 until 2024, reaching an all-time high of 0.45 percent…