How has your approach to capital planning changed in light of today’s regulatory and financial environment?
For many years enterprise risk management was more of a concept than a reality. Now all that has changed.
Enterprise risk management programs have been implemented by organisations of all sizes, with Treasury central to this process. The current regulatory environment requires banks to hold capital not just on their current portfolio. Now they are also required to plan capital for the next three years.
Post 2008 Financial Crisis
Banks must now carefully identify the way their businesses, projected revenues, losses, reserves and capital levels will evolve under adverse macroeconomic scenarios. Regulators around the world have consistently increased the level of regulatory capital required.
To be successful, banks need both an infrastructure and a process for identifying businesses that create long-term value. The system must also be equipped to restructure businesses that are inefficiently managed but have growth potential. The data demands of this process are very high – and they straddle the two domains of risk and finance that have traditionally worked independently of each other.
It’s a delicate balancing act – maximizing growth and profitability while managing risk and ensuring compliance with regulatory agencies.
This paper offers banks a capital management approach that involves long-term capital planning and efficient capital allocation. Learn why banks use enterprise stress testing to bridge the domains of risk and finance. Download the PDF paper below …
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