Fuelling doubts

Violence and uncertainty in the Middle East have caused energy market volatility to soar, testing the mettle of even the most sophisticated corporate hedgers. Will it prove to be the last straw for the world’s ailing airlines? Navroz Patel reports

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When energy traders see violence in the Middle East unfold live on their televisions, they know to expect a burst of volatility on their trading screens. So the sharp escalation of the Israeli-Palestinian conflict at the start of the year sent savvy corporate risk managers with large energy exposures scrambling to reinforce their hedges. “We pushed our hedge ratios up significantly in January and February when we saw the overall situation in the Middle East,” says Beat Lehmann, who, as Basel

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Credit risk & modelling – Special report 2021

This Risk special report provides an insight on the challenges facing banks in measuring and mitigating credit risk in the current environment, and the strategies they are deploying to adapt to a more stringent regulatory approach.

The wild world of credit models

The Covid-19 pandemic has induced a kind of schizophrenia in loan-loss models. When the pandemic hit, banks overprovisioned for credit losses on the assumption that the economy would head south. But when government stimulus packages put wads of cash in…

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