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New Frontiers in Risk Management & ComplianceThis blog will discuss the latest developments & spot futuristic trends that would impact the Risk Mgmt practices and skills. September 08, 2008 Managing the $6 trillion systemic risk at the global iconic legends - Fannie Mae & Freddie MacFannie Mae (The Federal National Mortgage Association) and Freddie Mac(The Federal Home Loan Mortgage Corporation) - the twin iconic GSE (Govt. sponsored enterprises) institutions that own or guarantee more than $5-6 trillion of the total 12 trillion mortgages have always been the legendary pillars of the US mortgage industry but their span of influence and prestige spread much wider across the entire financial markets around the world. For sometime now, both the mortgage icons have been under tremendous pressure due to the sub prime, mortgage and housing crisis in the US market. Although they guarantee or own only half of the mortgage market, because the subprime mortgage crisis has caused almost all other lending sources to pull out of the market, they are responsible for more than 80% of new mortgages being made in 2008. There was fervent hope from many informed quarters that these prestigious GSE's would somehow weather the perfect storm and lend the much needed stability to the mortgage market. More so as many U.S. banks as well as foreign governments own stock or debt in the two giants, implying gigantic proportion of the systemic risk beyond the US housing market. But this week a new chapter in managing the gigantic systemic risk will be written via the US Treasury, Fed Reserve and the Federal Housing Finance Agency(FHFA) coordinated intervention at these 2 iconic firms. As of yesterday Sept 7th 2008, both firms are now under conservatorship of the FHFA.
Posted by Sai Sireesh at 04:31 AM | Comments (0) August 24, 2008 Basel II Cross border realties - EU's CEBS releases range of practicesAs the Basel II journey continues world over, the European Banking Supervisors (CEBS) recently released a range of practices on Basel II implementation issues. I found this paper very informative and interesting and highly recommend to anyone interested in the practical realities of Basel II implementations across borders. This compilation is based on CEBS significant involvement over last year in collecting and analyzing the Basel II implementation issues that cross-border groups and their supervisors believe to be the most challenging from a cross-border perspective. This report classifies Basel II implementation into 3 groups and addresses some practical issues observed. A) Supervisory process for model validation. I cover off only some of the high level aspects to pique your interest to read the entire 18 page paper. The paper handles key issues in each of the above 3 areas and provides examples from specific scenarios around them. Continue reading "Basel II Cross border realties - EU's CEBS releases range of practices" Posted by Sai Sireesh at 07:34 AM | Comments (1) June 27, 2008 FDIC approves interagency Basel II based Standardized approach Capital proposal for smaller US banks;I had earlier blogged about the US NPR Basel II interpretation for its largest banks. Consider this as chapter 2 of the same blog. The Board of FDIC (Federal Deposit Insurance Corp.) yesterday issued a proposal for over 8,500 US smaller banks to have the option of adopting a simpler US version of Basel II guideline. Posted by Sai Sireesh at 07:59 PM | Comments (1) June 11, 2008 PRMIA Global ERM benchmark survey results Key data pointsPRMIA recently released the results of its global survey on “ ERM - A Status check on global best practices.” This survey is meant to benchmark the current and future state of ERM practices around the world. The results point to the emergence of ERM as a key component of current and future business processes. This survey was conducted in 103 countries across risk practitioners, regulators responsible for ERM, consultants and/or vendors working in ERM and members in other related professional roles. The respondents were from firms that were amongst the largest in the respective countries as well as from mid tier and smaller firms as well.
Continue reading "PRMIA Global ERM benchmark survey results Key data points" Posted by Sai Sireesh at 10:51 PM | Comments (0) March 12, 2008 Basel II 1st Jan 2008 accreditation milestoneIt's time to appreciate and salute the tireless efforts of the folks driving the Basel II initiatives for the last couple of years around the world. For many countries, 1st Jan 2008 accreditation being a big milestone for Basel II project sponsors and executives who i am sure have spent many sleepless nights during last 2-3 years on the Basel II accreditation and model validation initiatives. Reviewing the current state of Basel II initiatives in 2008, provides some interesting insights on the journey of Basel II early adopters. The Basel II was expected to first be implemented as per the 2008 timelines in the 13 financially important countries represented on the Basel Committee on Banking Supervision (BCBS). They include Belgium, Canada, France, Germany, Italy, Japan, Luxembourg, Netherlands, Spain, Sweden, Switzerland, the UK and US. And majority of the Tier 1 financial institutions in the above economies achieved their host country Basel II accreditation on 1st Jan 2008. Continue reading "Basel II 1st Jan 2008 accreditation milestone" Posted by Sai Sireesh at 08:20 AM | Comments (2) December 25, 2007 New frontiers in the Insurance supervision worldWishing everyone merry Christmas, happy holidays and a very happy new year too ! Whilst reading up on the convergence of supervision practices for financial conglomerates operating across Banking, Capital Markets and Insurance, I came across some interesting developments in the Insurance supervision world led by International Association of Insurance Supervisors (IAIS). There is a BIS Joint Forum comprising IAIS, Basel II, IOSCO to deal with issues common to the banking, securities and insurance sectors, including the regulation of financial conglomerates. Supervisors undoubtedly being key influencers of Risk mgmt practices globally. This article focuses on the developments in the supervision world and its impact on Risk mgmt in the Insurance industry. Continue reading "New frontiers in the Insurance supervision world" Posted by Sai Sireesh at 12:31 PM | Comments (1) November 06, 2007 Fed Reserve's creative FedVille !Risk Mgmt and Compliance is generally all serious business, albeit I am sure we all do come across some colorful characters, incidents that provide the much needed breaks, extra spice and humor to the profession. Occasionally I try to seek out expressions of creativity, innovation and humor in the financial markets. Whilst researching on creativity and innovation in markets, I came across a creative offering around financial literacy from Fed Reserve and found it fascinating enough to blog on this, even though other bodies too have done this e.g. Stock exchange simulations, FX markets games etc. Continue reading "Fed Reserve's creative FedVille !" Posted by Sai Sireesh at 05:55 AM | Comments (3) October 14, 2007 Convergence of Risk Capital, Disclosures in the PE, Hedge Funds, M&A era !Hola from Barcelona, Spain. In preparation for a Risk mgmt and Excel bootcamp here in Barcelona, I was studying the European Risk mgmt practices related to transparency and risk controls specially in context of Private equity, Hedge funds and much publicized M&A deals. At a broad level, these are about more transparency for investors based on EU instituted guidelines for streamlining M&A regulations last year as well as related to Hedge Funds operations. These are expected to have wide ranging implications for the markets guidelines in the US and the rest of the world too. Continue reading "Convergence of Risk Capital, Disclosures in the PE, Hedge Funds, M&A era !" Posted by Sai Sireesh at 04:21 AM | Comments (0) September 01, 2007 Financial Services for the Poor - Risks & Defaults !Desiring a break from following the subprime lending woes & the associated default risks in the US market, I jumped on a chance to work on a Research paper on Micro ventures financing. This blog is about some interesting facts about risks and defaults in the world of microfinance, micropayments, peer to peer lending and financial inclusion initiatives. Continue reading "Financial Services for the Poor - Risks & Defaults !" Posted by Sai Sireesh at 03:51 AM | Comments (1) July 16, 2007 Pillar 3 Disclosure - Prudential Std APS 330 Consultation paper from APRAAs the Basel II saga continues, in some developed countries the implementation is slowly inching past the Pillar 2 Supervisory review & model validation phase towards the Pillar 3 disclosures. In Australia, APRA has released APS 330 - a draft prudential standard for Market disclosure. Summary: Last month in June, APRA released the market draft prudential standard APS 330 Capital Adequacy: Market Disclosure (APS 330). This sets min. prudential disclosure requirements for locally incorporated ADI’s (Authorized Deposit taking Institutions) and a limited set of (quantitative only) disclosures for foreign owned subsidiaries. Continue reading "Pillar 3 Disclosure - Prudential Std APS 330 Consultation paper from APRA" Posted by Sai Sireesh at 12:47 PM | Comments (0) July 04, 2007 Basel II journey in US - Notice of Proposed Rulemaking (NPR)As a keen follower of the Basel II initiatives around the world, it is fascinating to study the local flavors of Basel II approach variations. As many developed economies approach the final Basel II implementation milestones in their respective jurisdictions, the US banks Basel II & Basel IA initiatives are entering final stages of comment and review. Continue reading "Basel II journey in US - Notice of Proposed Rulemaking (NPR)" Posted by Sai Sireesh at 07:20 AM | Comments (1) June 25, 2007 New Risk Frontiers - Managing Risk in the Virtual World of Avtars !Managing Risk in the virtual world - Who's responsibility is it anyway! Key Point - As more & more financial institutions get creative about reaching out to the youth market by establishing presence in 3D online worlds, it is going to be interesting as to how the traditional Risk management practices will evolve to keep up with this new online presence and associated risks. Will this be managed by the Technology Risk experts or would it fall under Retail Banking Channels Op Risk honchos ? Background: Banks tap social networks to target youth market - All of these have their own unique Risk exposures - possibly the most sigificant being the customer data protection as well as reputation risk and the most importantly who one is dealing with as most assume online Avtars !
Posted by Sai Sireesh at 05:19 PM | Comments (0) April 19, 2007 SEC Announces AML Compliance tool to assist Broker Dealer IndustryThis is an interesting news on Regulators taking a more pro-active role in collaborating with the industry to faciliate compliance practices. SEC Staff Announces Availability of Anti-Money Laundering Compliance Tool Posted by Sai Sireesh at 06:04 PM | Comments (0) April 12, 2007 10 Risk Frontiers ideas seeking thought leadership !Risk Mgmt & Compliance developments and practices continue to evolve so dramatically each day! Sleepless in Seattle, I start this blog to share, discuss and most importantly learn about the new Frontiers in Risk & Compliance - both current & futuristic trends with signficant impact on the Risk Mgmt & Compliance practices & profession. My future observations would focus on the following 10 Risk frontiers: 1. Risk Visualization Posted by Sai Sireesh at 07:49 PM | Comments (3) |
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