Open Risk White Paper 13: Federated Credit Systems, Part II: Techniques for Federated Data Analysis In this Open Risk White Paper, the second of series focusing on Federated Credit Systems, we explore techniques for federated credit data analysis. Building on the first paper where we outlined the overall architecture, essential actors and information flows underlying various business models of credit provision, in this step we focus on the enabling arrangements and techniques for building Federated Credit Data Systems and enabling Federated Analysis.
An overview of EU Financial Regulation initiatives: In the European Union there are several ongoing large scale legislative and regulatory projects that transform the context within which individual, firms and the public sector interact economically. While financial and regulatory reform is an ongoing process in all jurisdictions globally, the size and supra-national nature of the European Union makes those projects particularly interesting.
A new entry at the Open Risk Manual aims to provide a brief overview of ongoing projects / initiatives.
ESMA Securitisation Templates are now documented at the Open Risk Manual: The ESMA Securitisation Templates are now fully documented at the Open Risk Manual. Users can browse, search and cross-reference with the rest of the knowledge base.
Category Browsing The ESMA Templates Categories are part of both the Securitisation category and the Information Technology Category. Each one of the templates and each one of the sections within a template forms its own category.
RegNews Upgrade and Dashboard Integration: The Financial Regulatory News app (RegNews in short) is now integrated with the Open Risk Dashboard. The latest release adds several new feeds and allows filtering of news items by freshness (last day, last week, last two weeks) and by world-region (Supra-national, Americas, Europe and Middle East and Asia/Pacific).
As always feedback on the features and usability of the RegNews app are welcome (simply use the button!
If banks were airlines: Ever since the scary turbulence of the Great Financial Crisis it has been instructive and illuminating to compare the travails of the financial industry with the state of other industries, especially those more down to earth, also known as real world industries.
The automotive industry was particularly handy for good analogies: Almost all of us have first-hand experience with the successes and failures of risk management when it concerns cars and driving.
StatsNews: Aggregating Economic Open Data news:
StatsNews Version 1.3 of the RegNews Aggregator includes a separate stream of economic opendata news releases. Regnews is a web app developed by Open Risk to assist with keeping abreast with diverse financial regulatory news releases and publications. The app data are directly derived from the published regulatory RSS sheets (NB some are not conforming to RSS standards). If in doubt please refer to the original feeds (links provided).
Regnews: Financial Regulatory News Aggregation Version 1.2: The #RegNews Aggregator is a web app developed by Open Riskto assist with keeping abreast with diverse financial regulatory news releases and publications. The app data are directly derived from the published regulatory RSS sheets (NB some are not conforming to RSS standards). If in doubt please refer to the original feeds (links provided). Copyright of the publications is with the respective authoring institutions.
Reducing variation in credit risk-weighted assets - The benign and vicious cycles of internal risk models: March 2016 wasn’t a good month for so called internal risk models, the quantitative tools constructed by banks for determining such vital numbers as how much buffer capital is needed to protect the savings of their clients.
First came the Basel Committee’s proposed revision to the operational risk capital framework applicable to banks, next came a similarly fundamental overhaul of what form of risk quantification will be acceptable for calculating credit risk capital requirements.
Save the AMA whale: ΝΒ: This is not a post about real whales and the ongoing struggle to keep these magnificent mammals alive for future generations to marvel at. Hopefully the individuals who have risked their lives to bring the near extinction of many whale species to worldwide attention will not take offense with us usurping imagery linked to this valiant campaign. We simply want to draw attention to another, rather more armchair type of campaign, namely: saving the AMA risk model.
Risk Management Skills for the Fintech Era
Risk Management Skills for the Fintech Era: Financial services jobs continue being decimated. A recent (as of the initial post date) FT article was a sobering summary of the continuing transformation of the financial sector: 2015 alone has seen more than 10% reduction of the total workforce across large EU/US banks:
As main drivers for this true jobs hecatomb are cited higher minimum capital requirements (that depress Return on Equity and hence require lower costs to restore it to investor acceptable levels), low interest rates that erode Profitability Margins, and a generally subdued economic landscape which reduces Volumes.
Concentrating on Concentration Risk: Senior economists such as Ben Bernanke were still studying the Great 30s Depression when the financial crisis struck in full force circa 2007. Given the complexity of the modern economic and financial landscape compared to the blessed good old days - we have no reports of FWMD (financial weapons of mass destruction) from back then - we can reasonably project that economists will be studying and pontificating on causes and remedies for the current crisis for the next 100 years or so
In our personal lives, it is the balance between work and life, or the dreadful weight balance. In the professional sphere it might be the balance between debt and equity in the financial industry, or the balance between convenience and citizen privacy in the new tech industry, or the welfare of the many balanced against the property of the few, or finally the geopolitical balance of power of different peoples Balance ensures sustainability as it helps steer away from the risks that lurk at the extremes.
RegNews, the Regulatory News Aggregator: With all the ongoing activity around financial regulation having a convenient aggregation point for the main news is an indispensable tool for financial risk managers. This prompted us to build and roll out the Regulatory News App (RegNews in short), which is now live and freely accessible here. The app is designed to be usable both on a desktop and mobile environment.
In line with the beta testing status of the entire Open Risk website, this app will evolve, subject to user comments and feedback!
Open Risk developed an online accessible version of the AQR manual that offers additional means to access and browse the Phase 2 ECB AQR Manual.
NB: The AQR manual is now being integrated into the Open Risk Manual.