82,247
edits
Something for the weekend, sir?: Difference between revisions
no edit summary
Amwelladmin (talk | contribs) No edit summary Tags: Mobile edit Mobile web edit |
Amwelladmin (talk | contribs) No edit summary Tags: Mobile edit Mobile web edit |
||
| Line 4: | Line 4: | ||
==How do you find the time bombs in your balance sheet== | ==How do you find the time bombs in your balance sheet== | ||
The JC found to his surprise and delight that his big sister reads the newsletter — normally no-one in the Contrarian clan pays him the blindest bit of attention (in this regard they are like everyone else) — and after his peroration about alternative tier one this week she had a question: does ''anyone'' understand the banking system? | |||
It's a good question, and anyone who has lived through the last 15 or 20 years must be wondering. For a while in the same period the incidence of air accident fatalities has consistently declined, the incidence of banking smartphones seems to be continuous. | |||
The question has particular emergency for the the management team at UBS who has just taken on the assets and liabilities of Credit Suisse. While they appear on their face to have bagged the steal of the century, Credit Suisse is proven capability of sustaining and think of glee large losses in a short period must have giving them paws for thought. For who is to say that is not another 10 billion dollar loss buried somewhere in that balance sheet? | |||
Who, in other words, would be chief risk officer of a large financial institution. We know, in the case of silicon valley bank, that the answer to that question happened to be no one. | |||
Would it be possible, with sufficient acumen tonight to regard the books and records of an institution and be confident that there were no any bombs lying in wait? | |||
If about even has one, a global chief risk officers job. Must be pretty thankless. Not only is the the size and complexity of a universal bank's balance sheet in itself mind-bogglingly difficult to get a grasp of, but the individual problems that can cause a a meltdown have to particular qualities colon firstly, they tend to come from the place where you least expect it full stop secondly they tend, From a distance, not to look like festering wounds at all all. To the contrary, they often look like exceedingly profitable situations. The Archegos situation is a, cough, prime example. | |||
So a chief risk officer simply does not have the bandwidth, time, or analytical powers to deduce aggravated risk situations by herself. She must rely on her reporting chain — it might be six layers deep — to surface these risks and bring them to her attention. The chief risk officers job, in essence, is to ensure she has the right systems and controls in place that can identify these situational wrists and escalate them to her. | |||
===Hindsight is a wonderful thing.=== | |||
This is why we should take the moral dudgeon of regulators, politicians, and why is after the fact financial commentators with a pinch of salt. In hindsight, there is only one path of history. In foresight there are potentially infinite ones. Any prospective analysis of a disaster scenario who is entitled to treat each decision as as a known calculation with a determined outcome. That information is necessarily not available to persons making the decision at the time. | |||
Who would be credit suisse’s chief risk officer? Who would be ubs right now | Who would be credit suisse’s chief risk officer? Who would be ubs right now | ||