Risk Advisory Services (RAS)

The regulators have been increasingly focusing on the risk management tools to gauge the vulnerability to sudden external shocks.  A considerable attention has been paid to the systemic risk and as a result the focus is on the stress testing.  Many banks have actively been deploying the technique and spend bulk of their time stress testing market including credit risk, mainly because these are often their main risks.  In the present economic environment, enhanced stress testing is emerging as a standard supervisory tool, putting a premium on understanding what it involves and how it can best be used.  The need for an effective stress testing process has been a challenging task for many financial institutions.  However, if stress testing is well structured and integrated into business management then it can provide a useful basis for identifying vulnerabilities and gauging the long-term sustainability of their business models.  Similarly, in order to deal with operational risks, many institutions focuses firm wide stress testing on operational risks that occur in the context of economic scenarios that are systemic in nature and hence more actionable, rather than on the effects from unlikely one-time events

The approach to stress testing has evolved, with much greater use of enterprise-wide stress testing approaches and macro-economic inputs.  At the same time, Reverse stress testing is an additional approach to identify stress scenarios and events of concern.  Regulators are likely to demand ever more data to develop loss estimates of their own and ask ever more probing questions about processes for developing internal models, scenarios, and stress tests.   We can help you sharpen competitive differentiation by managing risk and capital more effectively and capitalising on the opportunities created by new regulations applicable in your jurisdiction.

Our risk advisory team provides the following services:

  • Credit risk
  • Measurement of CVA and DVA;
  • Development of XVA Models;
  • Regulatory and compliance risks;
  • Liquidity and Operational risk;
  • Implementation of Basel III;
  • Stress Testing