Financial risk management is a critical component for banks and insurance companies to ensure that they can identify, assess, and mitigate the various risks that they face on a day-to-day basis. The following are some of the financial risk management services that we provide to our clients :
- Credit Risk Management: This involves managing the risk of borrower default on loans or credit lines. Banks can use credit risk management services to assess the creditworthiness of potential borrowers, monitor the creditworthiness of existing borrowers, and establish risk limits and controls to mitigate credit risk.
- Market Risk Management: This involves managing the risk of market fluctuations affecting the value of a bank’s assets and liabilities. Banks can use market risk management services to analyze and manage exposure to interest rate, currency, and other market risks.
- Liquidity Risk Management: This involves managing the risk of a bank’s inability to meet its financial obligations as they come due. Banks can use liquidity risk management services to assess and manage their liquidity risk profile, establish contingency plans, and monitor compliance with regulatory requirements.
- Operational Risk Management: This involves managing the risk of losses due to inadequate or failed internal processes, people, and systems, or from external events. Banks can use operational risk management services to establish controls to mitigate operational risk and improve their risk management culture.
- Capital Management: This involves managing the company’s capital structure and ensuring that it has adequate capital to support its operations. Insurance companies and banks can use capital management services to optimize their capital structure, manage regulatory capital requirements, and assess the impact of new business initiatives on capital.
Furthermore, financial institutions are subject to regulatory requirements on several risk components which involves ensuring that the institution is in compliance with relevant regulations and requirements related to financial risk management. Banks are subject to a range of regulatory requirements related to risk management, including capital requirements, liquidity requirements, and risk reporting requirements. At Capital analytics we help our clients with the following topics :
- Compliance risk assessment: This involves assessing the bank’s risk of non-compliance with relevant regulations and requirements. The bank should identify relevant regulations and requirements, assess the bank’s compliance risk profile, and develop a compliance risk management framework.Capital analytics’ consultants have already worked on requirements held by the following regulators: EBA,ACPR, ECB, BoE, PRA, BaFin, CSSF, CBUAE,SARB, SRB
- Capital and liquidity management: Banks are subject to regulatory requirements related to the amount and quality of capital they must hold and the amount of liquidity they must maintain. Banks should develop capital and liquidity management strategies that are aligned with regulatory requirements.
- Risk reporting: Banks are required to report on their risk exposures and risk management activities to regulators. Banks should have effective risk reporting systems and processes in place that allow them to produce timely and accurate reports.
- Stress testing: Banks are required to conduct stress tests to assess their ability to withstand adverse economic conditions. Banks should have effective stress testing processes in place that are aligned with regulatory requirements.
- Governance and oversight: Banks should have effective governance and oversight structures in place to ensure that regulatory financial risk management requirements are being met. This includes ensuring that the board of directors and senior management are actively involved in risk management, and that there are effective controls in place to manage risks.
Overall, Capital analytics can help identify and mitigate risks, and ensure an institution’s ongoing viability and success.