More NewsQuarter of Leading Global Banks to Urgently Review Risk Management

Quarter of Leading Global Banks to Urgently Review Risk Management

Almost a quarter of leading global banks surveyed are to implement additional risk management techniques because existing models failed to prevent losses which occurred as a result of financial turbulence during the past year. This is the main finding of research released recently by chartered accountants Deloitte & Touche. The survey found that many banks now realise that current risk management techniques, particularly ‘value at risk models’, failed to perform during rough market conditions. The findings show that 24 per cent of respondents will re-enforce existing techniques with the ‘extreme value theory’ to deal with exceptional events, a method which is currently only used by five per cent of banks. In addition, the majority of those interviewed said that the failure of their risk models to cope with the loss of market liquidity was a major concern. As a result, over half of those surveyed plan to implement systems to measure extreme stresses on liquidity.

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