Adjust your risk appetite and risk management
zeb offers you a comprehensive and pragmatic set of tools for a
- top-down structuring of your target balance sheet control
- forward-looking capital allocation and
- hypothesis-driven approach for the adaptation of risk measurement and pricing tools
The Corona crisis will inevitably lead to changes in balance sheets. Risk parameters are moving beyond ranges previously assumed to be plausible, leading to breaches in risk limits.
In the aftermath of immediate emergency measures (i.e. avoiding unnecessary credit defaults), it is crucial to regain control over your risk appetite by
- rapidly defining the target balance sheet and portfolio structure in line with updated risk assumptions and expected developments on an industry level
- cascade the target balance into adjusted sector and counterparty limits and, at a later stage,
- providing guidance on expected future margins and returns.
Based on the newly defined risk appetite, underwriting processes and risk assessment tools (e.g. credit assessment) must be adjusted accordingly.
It is especially important to use the information generated during the portfolio stress testing to determine the gap between the current and target balance sheets.
In addition, new macro and sector-level insights should always be considered immediately.
Control functions related to capital allocation, business units and corporate development functions.