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Gathering data and modeling is – by a considerable margin – the best way to optimize portfolio construction and management. But because modeling talent is spread thin and wide, it would be...
October 11, 2024 | By Tony Hughes
The historic CrowdStrike outage in July brought operations across numerous industries and public service sectors to a halt, causing over $5 billion in estimated costs and damages. The incident was...
October 11, 2024 | By Baivab Jena and Aaron Pinnick
Global supply chains used to be the concern of a select group of operational risk managers overseeing complex manufacturing systems. But today the responsibility for this multi-layered risk is much...
October 4, 2024 | By Cristian deRitis
You can’t run from global supply-chain risks – they defy borders and time zones to disrupt at seemingly the worst possible moments. But you can manage risk and build resilience across your value...
October 4, 2024 | By Dean Alms
The Digital Operational Resilience Act (DORA), initially published at the end of 2022, aims to strengthen the IT security of financial entities doing business in the EU such as banks, insurance...
September 20, 2024 | By Jag Lamba
The CrowdStrike outage that occurred on the evening of July 18 (UTC) into the following morning affected thousands of organizations worldwide, serving as a stark reminder of how interconnected our...
August 23, 2024 | By Davis DeRodes
Decades-old payment and credit card regulations have clarified consumer rights and protections from fraud and theft. Banks became adept at managing the risks and losses within one of their most...
August 9, 2024 | By Jim Romeo
Complicated by cyber hazards and constantly evolving artificial intelligence, managing operational risk has never been more difficult for banks. Facing more regulatory scrutiny, operational risk...
August 9, 2024 | By Clifford Rossi
Supply-chain vulnerabilities existed before the trade disruptions and inventory shortages attributed to the pandemic outbreak early in this decade, but the concerns are no longer just about shipping...
June 21, 2024 | By Dawn Kissi
The range of potential threats faced by banks today is limitless, and scenarios are therefore becoming more and more complex. But is this a good trend? When we take a closer look at the evolution of...
June 14, 2024 | By Tony Hughes
While the February jobs report from the U.S. Bureau of Labor Statistics reflects a cautious labor market impacted by high interest rates, the hiring outlook in the risk management sector is still...
April 5, 2024 | By Dean Essner
Continuity and resilience practitioners were faced with numerous challenges throughout 2023 due to the ever-evolving threat landscape. The World Economic Forum cited the cost-of-living crisis,...
February 2, 2024 | By Steve Richardson
How well a financial services firm fares in a crisis isn’t down to luck. A large part of their success likely depends on the robustness of their model risk management (MRM) processes. By continually...
November 17, 2023 | By Miles Elliott and David Asermely
The largest banks in the U.S. are now facing major changes to the way they calculate capital operational risk. But the proposed modifications to regulatory capital are misguided and not reflective of...
November 17, 2023 | By Clifford Rossi
As the financial sector faces the most treacherous risk climate in more than a decade, financial firms are reevaluating their model risk management (MRM) practices – and not a moment too soon. Errors...
October 27, 2023 | By Miles Elliott and David Asermely
In today’s complex legal environment, it is crucial for businesses to prioritize risk management and protect their company from management liability risk. This is the risk that a business or its...
September 15, 2023 | By Angela Rimgaila
In June, the Federal Reserve Board of Governors, Office of the Comptroller of the Currency (OCC) and Federal Deposit Insurance Corp. (FDIC) jointly issued long-awaited third-party risk management...
July 28, 2023 | By Geoffrey Lash, Justin Waller and Simon Zais
Third-party risk management (TPRM) is increasingly a major point of discussion in boardrooms across the globe. Recent disruptions, including the collapse of several U.S. regional banks and the supply...
July 14, 2023 | By Jordan Johnson
Driven by illicit activities like money laundering and cyberattacks, fraud has been a constant challenge for financial institutions, which must regularly adapt to keep up with the growing...
July 7, 2023 | By John Thackeray
In the 1990s, when financial risk management was in its infancy, credit and market risk dominated the field. Few practitioners even called themselves risk managers, let alone specialists in a...
June 9, 2023 | By Tod Ginnis
Choice is the root of all evil in statistics. We require bankers to use a single model, which ultimately means that one must be selected. It’s unrealistic, however, to believe that this choice will...
April 21, 2023 | By Tony Hughes
Disruptions to supply chains have become all too common in recent years, with far-reaching macroeconomic and risk management implications. While organizations have generally adjusted to recent...
March 31, 2023 | By Alex Saric
Is risk modeling broken? Many so-called experts are now beating that drum after flaws in historical-data-driven models were exposed amid the pandemic. Some are even saying we should completely ditch...
February 24, 2023 | By Tony Hughes
In 2022, it became clear that effective supply chain risk management (SCRM) is not a luxury but a necessity. The year saw numerous disruptions to global supply chains, including the Russian invasion...
February 24, 2023 | By Skyler Chi
You’re ready to interview for an exciting risk management position. You’ve researched the company’s business and its current challenges, and you’re prepared to explain to human resources or the...
February 10, 2023 | By Tod Ginnis
Corporate legal departments have frustrations that risk management and other control functions can identify with: Business units regard them as obstacles to be avoided and do not appreciate the...
February 3, 2023 | By David Weldon
Contending with an unprecedented combination of shocks, financial risk modelers have lately had to muddle through some very tough times. Indeed, when you are relied upon to forecast the financial...
January 20, 2023 | By Tod Ginnis
Costly, impactful operational risk events – ranging from fraud, money laundering and record-keeping failures to geopolitical risk and Libor manipulation – grabbed many headlines in 2022. The...
January 13, 2023 | By Clifford Rossi
Next year, with a potential recession on the horizon, bank stress testing will be as vital as ever. Today, though, these tests remain too reliant on scenario projections of uncertain quality. Why is...
November 18, 2022 | By Tony Hughes
Over the last two years, ongoing disruptions from the COVID-19 pandemic to the Suez Canal blockage’s effect on supply chains to ransomware attacks on critical infrastructure (as seen in the Colonial...
November 11, 2022 | By Bogdana Sardak
Stoked by high inflation, supply-chain breakdowns, recession fears and geopolitical conflicts, global economic uncertainty now abounds. What does this unstable environment mean for financial risk...
October 14, 2022 | By Tod Ginnis
Having seen my share of risk models in the financial services industry, there are two conventional practices that I find especially infuriating. One is the overuse and misuse of statistical...
August 26, 2022 | By Tony Hughes
Amid the pandemic, inflation, the oil crisis, and the ongoing geopolitical risk of the past two years, there has been a lot of fair criticism of both backward-looking and forward-looking approaches...
August 19, 2022 | By Alla Gil
Whenever I question the statistical properties of scenario-based projections, people invariably remind me that the journey is more important than the destination. But how should we assess the quality...
July 29, 2022 | By Tony Hughes
Even before the pandemic, model risk management (MRM) departments seemed to be on shaky ground. Indeed, at many financial institutions, credit risk modeling had become largely a check-the-box...
July 8, 2022 | By Deniz Tudor
The chief risk officer and head trader of Archegos Capital Management have entered guilty pleas and agreed to cooperate in the federal prosecution of the family office’s owner Bill Hwang and chief...
May 20, 2022 | By Jeffrey Kutler
Sanctions put in place after the Russian invasion of Ukraine highlight the need for companies and risk managers to not only verify the identities of their direct customers and suppliers, but even...
April 22, 2022 | By Cristian deRitis
When a major risk event unfolds, whether it’s, say, the GFC or COVID-19 or Russia’s invasion of Ukraine, a degree of risk management introspection naturally follows. Financial institutions must...
March 11, 2022 | By Clifford Rossi
While many hoped vaccines would bring a return to business as usual, the unfortunate reality was that businesses faced increasing disruptions in 2021. Due to constantly emerging variants, vaccine...
March 11, 2022 | By Atul Vashistha
There’s more than one avenue to success as a financial risk manager. Some take an entry level risk job and work their way up through the ranks. Others begin in a different field and transition into...
March 4, 2022 | By Tod Ginnis
Market structural changes, machine-learning techniques and climate risk management initiatives will present some of the most interesting model risk management obstacles and opportunities for banks...
February 4, 2022 | By Clifford Rossi
Recently, I was surprised to learn that revenues from competitive esports exceeded $1 billion in 2021, an increase of nearly 15% from 2020. I don’t understand the appeal of watching somebody else...
February 4, 2022 | By Cristian deRitis
Contributing to public-private partnership efforts to supply billions of COVID-19 vaccine doses worldwide, Citibank has teamed up with the U.S. International Development Finance Corp. (DFC) to...
October 15, 2021 | By Jeffrey Kutler
Not much more than a decade ago, we were in the midst of the global financial crisis. In contrast to the crisis that is now looming - climate change - banks were then the polluters, not with toxic...
August 13, 2021 | By Peter Hughes
Over the next 12 months, as COVID slowly wanes as an economic disruptor, a lot of industry credit risk models will be redeveloped. Historically, these methods have provided superior predictions to...
July 30, 2021 | By Tony Hughes
Consider a new pandemic scenario. In 2023, a pathogen will be discovered that, relative to COVID-19, is twice as deadly and five times as transmissible. It quickly becomes clear that vaccine...
June 25, 2021 | By Tony Hughes
As the world awakens, one of the vexed questions we face as model risk managers is when to redevelop. The simple fact is that the established procedure of designing and building a model, and then...
April 23, 2021 | By Tony Hughes
Traditional risk management methodologies have failed during the pandemic, prompting financial institutions to work diligently to improve their agility, resilience and adaptability. But in an era of...
April 23, 2021 | By Alla Gil
Playing the white pieces, the banks led with the regulatory capture opening. In a sequence of expertly coordinated moves, they progressively took control of the chessboard. That should have led to an...
April 1, 2021 | By Peter Hughes
The leading U.S. financial regulators are active participants in a movement among supervisory agencies around the world to support technological innovation. But, until February, two prominent banking...
March 12, 2021 | By Jeffrey Kutler
Whether we're talking about the U.S.-China trade war or Brexit or climate change or the COVID-19 pandemic, the events of 2020 have highlighted that it's impossible to separate geopolitical and...
February 19, 2021 | By Brenda Boultwood
Record numbers of hurricanes and wildfires are unlikely to prompt significant changes in models gauging the probability of resulting losses, but tools accompanying recent catastrophe model updates...
February 5, 2021 | By John Hintze
Marcos Lopez de Prado, a Cornell University professor of practice, the Journal of Portfolio Management's 2019 Quant of the Year Award winner for machine learning innovations in asset management, has...
October 2, 2020 | By Jeffrey Kutler
Looking in the rearview mirror, it's usually easy to see whether previously accepted risks were adversely realized. The moment you pay back the $20 I loaned you last month, for example, I know that...
September 25, 2020 | By Tony Hughes
Pre-pandemic, higher corporate profits were often delivered by under-investing in internal controls and minimizing any operational process redundancy. During the pandemic, inadequate redundancies for...
September 18, 2020 | By Brenda Boultwood
COVID-19 has forced businesses to rethink the way they treat and manage employees. Considering the work-from-home strategies adopted by many firms and the general economic decline, there is now an...
August 21, 2020 | By Brenda Boultwood
At a time of growing concern about climate change and sustainability, pollution attributable to production and accumulation of plastics is raising questions relating to the extent of the long-term...
July 17, 2020 | By Jim Romeo
Prospering in the new normal will require a keen focus on the customer and risk management team skill sets that enable organizational agility. Business managers decide daily the risks that are worth...
July 17, 2020 | By Brenda Boultwood
As COVID-19 and the global economic slowdown expose vulnerabilities in third-party networks and industrial supply chains, a firm specializing in monitoring and managing those risks has hired a former...
May 22, 2020 | By Katherine Heires
There are complaints small businesses are being lured into a stimulus loan bait-and-switch. Businesses pursue a CARES Act loan expecting it to be forgiven, only to discover later small print that...
May 22, 2020 | By Peter Downs
A recent GARP Risk Intelligence article, A View from South Asia: This Time Is Different, looked back from the pandemic crisis to how India's Xennial generation experienced the evolution in...
April 17, 2020 | By V.P. Jyotsna and Nupur Pavan Bang
The coronavirus crisis put a spotlight on global supply chains and the havoc that can result from any weak or disabled link between source and destination. As if on cue, the American Institute of...
April 3, 2020 | By Jeffrey Kutler
The scale and severity of the coronavirus outbreak sent shockwaves around the globe. The threat to human life and the need to protect our most vulnerable necessitated unprecedented levels of change,...
April 3, 2020 | By Peter Bannister
Countries around the world are struggling to keep up with the pandemic coronavirus. Global stock markets are on a downward spiral due to fears of recession, massive drops in demand, disruptions in...
March 27, 2020 | By Nupur Pavan Bang
Nasdaq has reached around the world for a chief risk officer, while the U.S. Securities and Exchange Commission falls in line with peer agencies and firms that it regulates by appointing a chief data...
February 7, 2020 | By Jeffrey Kutler
Those engaged in social science - a category that includes most forms of risk modeling - are often accused of being bad scientists. The accusations generally come from physical scientists, who enjoy...
January 17, 2020 | By Tony Hughes
For the financial services industry, long reliant on connections to external system and services providers, “third-party risk management is not new,” consulting firm EY and the Institute of...
November 27, 2019 | By Jeffrey Kutler
The CLS foreign exchange settlement services utility has named longtime operational risk executive Deborah Hrvatin chief risk officer. CLS said on November 5 that Hrvatin, most recently of Citigroup...
November 8, 2019 | By Jeffrey Kutler
There is broad agreement on the expansive vision and holistic mobilization required for effective management of third-party risks, but a Deloitte survey indicates shortfalls in execution....
October 25, 2019 | By Ted Knutson
When banks manage risk, conservatism is a virtue. We, as citizens, want banks to hold slightly more capital than strictly necessary and to make, at the margin, more provisions for potential loan...
October 11, 2019 | By Tony Hughes
My team did a big validation project for a financial institution a few years ago. We were actually the backup, external validators called in to resolve a disagreement between the model build team and...
September 13, 2019 | By Tony Hughes
Over the past 32 years, John Forlines has worn many hats at Fannie Mae - the mortgage giant that ranked 22nd on this year's Fortune 500 list. Starting his career in the internal audit group in 1987,...
September 6, 2019 | By Robert Sales
Security incidents are inevitable. Responding to and resolving them begins with a fundamental first step: reporting. Michael Humphrey points out that it is “only human” not just to make mistakes, but...
September 6, 2019 | By Jeffrey Kutler
Two months after unveiling its Third Party Risk Management (TPRM) framework, the Shared Assessments third-party risk assurance program announced the availability of a new module covering periodic...
August 30, 2019 | By Jeffrey Kutler
For good reason, “cost reduction” has become a dreaded term in the corporate world. Most often, when faced with subpar financial performance, the first resort for many organizations is to issue a...
August 9, 2019 | By Vafa Vahid
Eyeing perceived gaps and mounting complexities in third-party risk management, the Shared Assessments Program is offering a comprehensive framework and guide to promote best practices in the field....
July 12, 2019 | By Ted Knutson
High-profile IT failures, ranging from the Equifax data breach to TSB's botched tech upgrade to the damaging customer-account problems at Barclays and RBS, have recently proliferated in the financial...
May 31, 2019 | By Jo Paisley
For centuries, physicists have tried to arrive at a “theory of everything,” or one grand cosmic principle that explains the mechanics of the universe. Einstein came close with his theory of...
May 24, 2019 | By Brenda Boultwood
For all their attention to, and observable improvements in, vendor risk management, companies are struggling to address mounting cost, regulatory and governance challenges, according to the 2019...
May 10, 2019 | By Ted Knutson
Fascinating events have radically altered the course of financial risk management for the past 3,000 years - starting with Homer's definition of value back in the 8th century B.C. and moving all the...
March 22, 2019 | By Marco Folpmers
Much guesswork surrounds the consequences of a hard, or no-deal, Brexit - the possibility that the United Kingdom will leave the European Union on March 29 without an agreement for a smooth...
March 8, 2019 | By John Hintze
Research has shown that women make or influence 80% of consumption decisions and account for (U.S.) $20 trillion of consumption expenditure. It would make sense for companies to get this fairly large...
March 6, 2019 | By Nitya Bodavala and Nupur Pavan Bang
As Warren Buffett once said, “It takes 20 years to build a reputation and five minutes to ruin it.” This rings especially true today, as high-profile crises - including cyberattacks, product recalls...
March 1, 2019 | By John Thackeray
If you want to learn from the operational risk mistakes of others and prevent incidents that could severely impact your firm's reputation and bottom line, then case studies are your best bet. An...
February 22, 2019 | By Marco Folpmers
Growing sensitivity to third-party risks - extending out to fourth, fifth, and nth parties - is resulting in more rigorous management and higher prioritization of these ecosystem exposures, according...
January 25, 2019 | By Juliette Fairley
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