RBS Risk Management ppt template - BRACIL：苏格兰皇家银行风险管理bracil PPT模板.ppt

The Financial Crisis and the Future of Risk Management Paul Ingram- Global Head of Market Risk, RBS The scale of the market movements The scale of the market movements TED spread, i.e. the spread between US 3m T-bills and US 3m LIBOR rose significantly Panic and the rescue Lehman Brothers was the next most vulnerable institution and after rescue talks with the Korean Development Bank, then BoA and lastly Barclays fell, it was forced into bankruptcy on 15 Sep ’08 The house of cards started to tumble with Merrill’s selling itself to BoA, Wachovia to Wells Fargo, HBOS to Lloyds. Morgan Stanley and Goldman Sachs came very close to losing their independence Governments had to step in to rescue RBS, AIG and the Icelandic banks and then provide capital for many major financial institutions. Pre-crisis characteristics Crises share similar factors, a fundamental mis-pricing of risk driven by a combination of: A new “paradigm” Disconnect with the underlying economics Greed and hubris Pre-crisis characteristics Current regulatory response More capital More conservative modelling More transparency More independent challenge Crisis intervention Moral hazard Loss of confidence Loss of legitimacy Ideas for improvement Countercyclical capital measures- ensure banks hold more capital when markets are benign Penalise excessive leverage or funding mismatches Focus on bespoke risk management- ensuring that practices are fit for the institution Take action on systemic liquidity risk Intervene in markets to control macro-economic risk? Thoughts for investors There is no such thing as a free lunch Understand the investment proposition Consider what could happen in a stress event Who will provide you with liquidity? Key learning from all crises DON’T: believe in new paradigms buy or sell anything you don’t understand rely entirely on models, ratings or market prices assume you can sell at the market price, or at all assume anything will remain the same forever get carr