Whilst credit and market risk management have matured, managing non-financial risks has become a growing challenge for financial institutions.
As we approach the festive break it is the time of year when many of us try to predict the future. During 2016 historic low interest rates, unexpected political upheaval and euro scepticism set a new context for the future (e.g. Brexit, Trump, mass migration and anxiety around forthcoming elections across the Eurozone).
Financial institutions are required to undertake a Strategic Risk Assessment (SRA) and perform stress testing as part of their ORSA and ICAAP to identify the financial impact of stress events on their P&L, capital, funding, liquidity, and balance sheet.