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ANALYSIS
March 2, 2009
Sagging Index no longer reflects what’s going on in the market, some say, Replacements? Google it, to start.
March 2, 2009
Downward price spiral will actually boost the cost of capital for most companies. CFOS, take note.
March 2, 2009
The latest bailout at AIG could be a preview of how the president will deal with Wall Street.
March 2, 2009
No corporate defaults. Big debt offerings. Percolating CP issuance. Things may be looking up in the capital markets.
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January 19, 2009 12:01 AM ET
BLOOMBERG
The international banking industry is also working to create common methods on how to report risk, after the turmoil of the past year exposed flaws in their control systems and procedures, blamed for spectacular write-downs and cases of fraud. The Risk Analysis Service (RAS), which provides data on more than $1.3 trillion worth of global banks’ exposure to debtors, said the number of participants had increased by around a quarter in the past year, adding it expected the current number to double over the next year. “We joined RAS so we could benchmark UniCredit against our competitors,” UniCredit chief risk officer Henning Giesecke said when the bank joined the service. “It is helpful ... because it provides us with an overall view of how an industry sector is performing.” Meanwhile, mathematicians from IBM are helping analyze $44 billion of losses collected by the Operational Riskdata eXchange Association (ORX) in an effort to create better safeguards against operational losses. “You will get a far better and more realistic appreciation of potential risk if you have access to broad industry-wide data than you would from a single organization,” said IBM spokesman Bill Mew. ORX member-banks provide data on their losses due to fraud, legal action, computer failure and lax internal practices among other risks. Operational risk broadly includes all risks apart from market risk—the danger of an adverse market move; credit risk—the risk of loss due to a debtor’s failure to repay the debt; strategic or business risk—the possibility of a wrong business decision; and liquidity risk. Membership of ORX, founded in 2004, has more than tripled in the past three years and now counts 52 banks, including HSBC, Barclays, J.P. Morgan and Bank of America. Banks are also making progress in introducing standard methods for reporting risks and are developing better risk models to calculate probable gains and losses on their assets in a variety of scenarios. Last month, the Securities and Exchange Commission voted in favor of requiring companies to file financial reports in the XBRL format. Consultants Celent say the new focus on risk management will be one of the top drivers of spending on information technology and services by financial companies, which they expect to reach $364.5 billion globally by 2010. Basel II rules, due to be phased in over the next few years, also aim to ensure that banks around the world meet similar requirements for matching capital cushions to risk. “In 2009 banks will be more regulated, and hiring of risk managers will pick up and carry on into 2010,” said Louis Altman, a risk recruiter at London-based hiring firm Hudson. Bob Penn, a partner in the regulatory practice at leading British law firm Allen & Overy, agreed. “Banks are going to feel under siege for the next 12 to 24 months in terms of their regulatory requirements,” he said. “It’s safe to say that we will have a busy year.”
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CRAIN'S BENEFITS OUTLOOK 2009
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