"From a #riskmanagement perspective, it is challenging to #model physical and #transitionrisks given the #uncertainty around #climaterisk drivers, such as changes in #governmentpolicy aimed at reducing #greenhousegasemissions, the pace of technological change, and uncertainty around the transmission channels. A dearth of in-house modeling tools and reliance on #thirdparty vendors also hamper #banks’ ability to properly understand and manage #risks. The most recent #boe climate biennial exploratory scenario (#cbes) noted that “banks varied in their ability to scrutinize and understand the strengths and weakness of third-party models, and adapt them appropriately to the CBES.” As a result, projected #losses for banks varied widely, suggesting a high degree of uncertainty about the magnitude of climate risks as well as a limited ability to accurately reflect such risks in business decisions."
This article discusses the proposed #eu #cyberresilienceact (#cra) as a response to the growing #cybersecurityrisks associated with the fourth industrial revolution and the Internet of Things (#iot). It provides an overview of the CRA's provisions, including its #risk-based approach, #regulatoryrequirements, and scope of application, and critically evaluates them.
The study emphasizes the need for a better understanding of #ai to avoid policies that may hinder its benefits. It argues for a cross-disciplinary approach to AI #governance and clarifying its core concepts to build trust. The paper addresses two key questions: 1) What is the best way to safely introduce AI to maximize well-being and #sustainability in light of its potential #risks? and 2) What specific policy steps should be taken to implement it?
" The biggest Shortcoming of the recent reforms to the stabilization of the #financialsystem, such as #baseliii and the American #doddfrankact Act, is that they increase the #capitalrequirements rather than the causes of the increased #risk. It would generally be better to forbid risky and complex #financialproducts than to further increase #regulation complexity."
"This paper investigates the relationship between #geopoliticalrisk and #financialstress using a bivariate #var model. The study uses the #gpr Index to measure geopolitical risk and the OFSR FSI index to measure financial stress over a period of 06 January 2000 - 03 March 2023 on daily data. The results show a significant relationship between financial stress and geopolitical risk"
"We find that the more risky the #insurer ’s #investmentportfolio is, the more #risk the insurer tends to #transfer to the #reinsurer."
#insurance#climaterisk"This paper discusses the relationship between the financial constraints faced by infrastructure assets due to #floodrisk exposure and their ability to finance adaptation to such #risks through internal resources. #risktransfer mechanisms such as #floodinsurance were shown to be a consistent channel leading to increases in #riskreduction through adaptation. "
#operationalrisk #oprisk #fraud #marketabuse #riskmanagement"Our DD analysis reveals that #workingfromhome lowers the likelihood of securities #misconduct; ultimately those working from home exhibit fewer misconduct alerts."
This paper explores potential revisions to the calculation of the #solvencyII#risk margin (RM) and contributes to the ongoing discussion by formally defining the concept of capital-on-capital cost. The paper highlights the need for practitioners to consider capital-on-capital costs in their #lifeinsurance#riskmanagement frameworks and for policymakers to carefully evaluate the potential impact of any revisions to the calculation of the RM.
This study examines the relationship between reputational events and business sustainability by assessing the effects of such events on the share prices/market capitalisations of FTSE/JSE Top 40 Index entities. Using event study methodology and Tobin’s Q ratio, the study found that reputational events are associated with significant negative cumulative average abnormal returns on the day of the event announcement and for a period thereafter, highlighting the need for listed firms to include #reputationalrisk within their #riskmanagement management frameworks and for practitioners to implement reputation management strategies.