3. FINANCIAL
INSTITUTIONS
THE REGULATOR
REGULATIONS
MONTHLY
REPORTING
The fascinating world of RegRisk:
Post â08 financial crisis
IRRBB CREDIT RISK
MARKET RISK LARGE
EXPOSURES
BASEL IV
IFRS 9
LIQUIDITY RISK
LEVERAGE
RATIO
AD-HOC &
INTRA DAY
STRESS TESTING
SCENARIOS
RISK MODEL REVIEWS
White Rhino
Events
Black Swan
Events
Environmental
Factors
Political
Factors
Macro-Economic
Factors
Good afternoon, ladies and gentlemen. I am Matthias, Co-founder and Managing Director EMEA of ElysianNxt, a Belgian-Thai RegTech company, focusing on regulatory risk. What is Regrisk about? Banks all over the world need to report to the local regulators how they deal with different types of risk. Banks spends millions of dollars in systems dealing with these kind of regulatory requirements. During decades they were focused on month end reporting to the regulators.
After the Financial crisis in 08, different reforms like the IFRS9 standards started asking banks to use forward looking elements in their provisions. Also, black swan events like covid-19 or upcoming grey rhinos like climate change as part of ESG, the regulator is now asking banks for what if scenarios or stress tests that need to be produced intra months or sometimes intra day.
Despite having spent millions of dollars in systems to calculate risk measures, these systems are way too slow and way too rigid to be able to respond to those intra month simulations and what if scenarios required by the regulator.
To be able to respond in a timely fashion they often have to rely on high level management guestimates, produced in excel spreadsheets, No justification or audit trail back to the underlying contracts. Good luck if you need to explain the numbers.
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Itâs comparing the nokia with the I-phone with the difference that the I phone is also much cheaper this time.
You can implement much faster, the end user can really play around with the system and do simulations and stress tests. The calculations are performed in minutes instead of days and itâs saves the banks al lot of money to become and stay on top of the regulation.