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Partnering with SAS, Standard Chartered Bank built a robust stress testing platform. It started out as a tool for regulatory compliance and was expanded for assessing the effect of crisis scenarios on its future P&L and balance sheet. The bank has migrated this Scenario-Based Analytics Platform to a centralized and more powerful second generation, and SAS is a key technology component in the solution.
The COVID-19 pandemic has disrupted markets, bringing ASEAN’s major economic activities to a halt. Banks, reeling from the impact themselves, are under immense pressure to support ASEAN’s recovery and growth in the post–COVID-19 era. As a pillar of the economy, banks in the coming months will need to make critical decisions as they respond to this recovery and the need for incremental lending from affected sectors and the population at large.
No matter what your initiative, having accurate data is the first step if you want to make the best possible decisions. There’s certainly no lack of data. But simply having lots of data won’t necessarily help you answer big questions, understand problems or make faster, better decisions. To achieve competitive advantage, maintain profitability or satisfy customers, you must be able to act on what the data tells you.
IFRS 9 is driving changes that have significant implications for the way financial firms manage their businesses. The new accounting standard requires the consideration of past events and current conditions, along with reasonable and supportable forecasts, to calculate ECL over the remaining life of a financial instrument. The three key components of IFRS 9 are the classification and measurement of financial instruments, the impairment of financial assets, and hedge accounting.
Covid-19 and the economic disruptions it created have thrown new light on the importance of stress testing in risk management workflows. While most regulators would say financial institutions were well prepared for the pandemic in terms of capital and liquidity, the crisis provided banks with more severe scenarios than they had previously modeled for. Most banks recognize that outcomes may have been far different without the support provided by governments, central banks and regulators, prompting a need to reassess existing practices for managing risk and assessing resilience.
The deadlines for implementing the latest round of Basel guidelines have been delayed to help institutions cope with the personal and commercial toll of the Covid-19 pandemic. As immense as the toll is likely to be, and as urgent as resolving issues related to the pandemic are, firms should not lose sight of the importance of preparing for Basel IV and the many difficulties it will create along the way. New or revamped technology will be required. New or revamped thinking and organizational structures, too. And not just during the implementation phase, but long after.
Basel IV is a huge change for the market. It will have significant impact on a bank’s business by increasing the constraints and rules, banks are operating with. This check list aims at helping you to avoid these major pitfalls and elaborate the best path for you for adopting a holistic approach to risk management.
Roll back the clock to 2019. Capital markets executives are preparing for a new economic reality – one in which uprooting old technology models, building scale and elevating the client experience are integral to growth. And most are making tangible progress, albeit more incremental than they might like. Then COVID-19 struck. Much has changed, both personally and professionally, but the economic shock has dramatically reinforced the urgency of transforming. Now more than ever, the capital markets industry must push harder on the accelerator.