This tangled web: banks seek to contain systemic model risk
Network studies are being used to identify model dependencies and concentrations
Ask any bank risk manager about interconnectedness and the conversation will quickly turn to the complex interlinkages that tie the fortunes of one firm to those of other financial institutions.
Yet this preoccupation with external threats may have blinded risk managers to the dangers lurking within their own institutions – namely the interconnectedness of quantitative models used to price trades, value exposures, measure risk and manage capital.
“We need mechanisms to address systemic
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@risk.net
More on Risk management
Why US banks are not taking their eye off reputational risk
The concept may be removed from supervisory exams, but the 2023 crisis showed the risk is real
Op Risk Benchmarking 2025: the FMIs
Exchanges and CCPs respond to regulatory scrutiny and evolving threats with tighter vendor management and scenario refreshes
EU banks want the cloud closer to home amid tariff wars
Fears over US executive orders prompt new approaches to critical third-party risk management
Op risk data: BofA biffed for $540m over insurance fund swerve
Also: Suspected French Ponzi, Banco Itaú’s overcharging kerfuffle, and power outage in Iberia. Data by ORX News
Emir 3.0 could complicate Eurex cross-margining for repo
Clearing house targets November 2025 to launch repo on Prisma, but new EU rules are imminent
Vendor oversight splinters across FMIs
Op Risk Benchmarking: firms grapple with “chaos” of third-party rule changes, amid growing recognition of cyber and resilience threats
Evalueserve tames GenAI to boost client’s cyber underwriting
Firm’s insurance client adopts machine learning to interrogate risk posed by hackers
Wait in the Q: US banks hold back on tariff-related provisions
Lack of data on supply chain vulnerabilities creates challenges for early CECL adjustments
