The coronavirus (COVID-19) hit Europe around February 2020, impacting the health of millions of people, leading to thousands of deaths. Businesses in many industries were hit and experienced lower outputs, while the stock markets plunged. Banks are affected not only by increased credit risk on loans to customers, but also by stressed deposit inflows or outflows. This has consequences from both an interest rate risk in the banking book (IRRBB) and liquidity risk perspective.
Financial institutions rely on complex quantitative models, processes and systems for business steering, risk management, financial reporting and to comply with regulation.
The risk of errors in these models due to incorrect development, implementation or use is therefore of primary concern to internal and external stakeholders. At the same time, new technologies such as Big Data and Artificial Intelligence are rapidly introducing new challenges on the use, explainability or potential biases in applying such techniques.
Corporate treasury is skilled at dealing with change. A large part of its job is managing the risk associated with cyclical trends, global regulatory initiatives, and geopolitical and macroeconomic events.