The 2023 Banking Turmoil and Liquidity Risk: a Progress Report (BCBS)
The banking turmoil of March-May 2023 was the most significant system-wide banking stress since the Great Financial Crisis in terms of scale and scope. Over the span of 11 days – from 8 to 19 March 2023 – four banks with total assets of about $900 billion were shut down, put into receivership or rescued. Subsequently, a bank with roughly $230 billion of assets was closed on 1 May 2023. The bank failures, while having largely distinct causes, triggered a broader crisis of confidence in the resilience of banks and banking systems across multiple jurisdictions.
Guidelines for Counterparty Credit Risk Management (BCBS)
These guidelines set out critical aspects of effective management of banks’ counterparty credit risk (CCR) and sound practices regarding what constitutes a robust CCR management framework. CCR is the risk that the counterparty to a transaction could default before the final settlement of a transaction’s cash flows. CCR is a multidimensional form of risk, affected by both the exposure to a counterparty as well as the credit quality of the counterparty, both of which can be sensitive to highly dynamic and fast-moving changes in financial markets.
Guidelines for Identification and Management of Step-in Risk (BCBS)
By publishing these guidelines, the Basel Committee on Banking Supervision aims to mitigate potential spillover effects from the shadow banking system to banks. This work is part of the G20 initiative to strengthen the oversight and regulation of the shadow banking system to mitigate systemic risks, in particular risks arising due to banks’ interactions with shadow banking entities.
Guidelines for Sound Management of Risks related to Money Laundering and Financing of Terrorism (BCBS)
Being aware of the risks incurred by banks of being used, intentionally or unintentionally, for criminal activities, the Basel Committee on Banking Supervision is issuing these guidelines to describe how banks should include money laundering (ML) and financing of terrorism (FT) risks within their overall risk management.
Principles for the effective Management and Supervision of Climate-related Financial Risks (BCBS)
Climate change may result in physical and transition risks that could affect the safety and soundness of individual banking institutions and have broader financial stability implications for the banking system. To address climate-related financial risks within the banking sector, the Basel Committee on Banking Supervision (BCBS) established a high-level Task Force on Climate-related Financial Risks in 2020 to contribute to the Committee’s mandate to strengthen the regulation, supervision and practices of banks worldwide with the purpose of enhancing financial stability.
Environmental Scanning: A Strategic Compass for Risk Professionals
Environmental scanning is a systematic process of monitoring internal and external environments to identify risks and opportunities. It enables organisations to anticipate changes, make informed decisions, and develop proactive strategies. By leveraging tools like SWOT and PESTEL analysis, risk professionals can enhance organisational agility, resilience, and competitiveness in dynamic business landscapes.
Case Study: Environmental Scanning and Strategic Transformation – The Netflix Example
Environmental scanning is a critical process for organisations seeking to adapt and thrive in dynamic markets. This case study examines Netflix's strategic transformation, driven by effective environmental scanning, as it transitioned from a DVD rental service to a global streaming giant. By leveraging insights from its external and internal environments, Netflix not only adapted to market changes but also set new industry standards.
Cyberpsychology: Navigating the Intersection of Technology and Human Behaviour for Risk Professionals
Cyberpsychology examines the psychological processes influencing human behaviour in digital environments, offering valuable insights for risk professionals. It addresses cognitive biases, social engineering, cybercrime, burnout, technostress, and emerging technologies like AI and VR. By integrating these principles, organisations can anticipate threats, enhance cybersecurity strategies, and foster resilience in the digital age.
Case Study: The Role of Cyberpsychology in Preventing a Social Engineering Attack
This case study explores how AlphaBank used cyberpsychology principles to prevent social engineering attacks following a financial breach. By addressing cognitive biases, stress management, and employee training, the organisation reduced phishing success rates by 75%. The study highlights the importance of integrating psychological insights into cybersecurity strategies for effective risk mitigation.
The Risk of Misinformation and Disinformation in Decision-Making: A Risk Professional’s Perspective
Misinformation and disinformation pose serious risks to decision-making by distorting facts, undermining trust, and influencing strategic and operational outcomes. Risk professionals must identify, assess, and mitigate these threats through governance, verification protocols, digital literacy, and scenario planning, ensuring decisions remain credible, ethical, and resilient in an era of information disorder.