Published on October 19, 2016 by Damian Burleigh
We had the pleasure of attending the 4th Annual Stress Testing event in London, hosted by Center for Financial Professional. The event was attended by senior stress testing professionals from global banks and was insightful, as well as impressive, in terms of the breadth and depth of coverage around stress testing. We’ve derived four key insights from the event:
Many organizations continue to struggle with data, systems, and reporting. However, it is encouraging to see many banks have resolved the challenges faced by the process, despite it being done using more resources and consultants, which has significantly increased the budget.
Capital planning, CAO, and Stress Testing being a part of the business process is key.Organizations such as Bank of America Merrill Lynch and ING stood out not only for how they have organized themselves but also for embedding stress testing within their business process.
All who attended agreed on one point – stress testing is “an art rather than a science”. While standardized approaches have generally been built into the frameworks of most banks, there was a difference in terms of how the scope of these applications was being developed. Finding ways to assess anomalies from a macro or operational perspective seemed to be proving incredibly difficult. The actual role of stress testing was to provide an objective view of risk to the business and not make definite statements on how it should be treated.
The starkest observation made was that as budget pressures increase, the demand for skilled quantitative resources also increases. Banks struggle to find skilled resources. Regulators, too, are faced with similar issues. Acuity Knowledge Partners predicts the advent of new liquidity rules and FRTB in 2017/18 will further accelerate and put pressure on innovation, and the BAU and modeling teams across both model development and validation.
This is where Acuity Knowledge Partners believes it has an “edge”, as it can assist organizations by providing skilled resources. Unlike the above four insights, these resources work only for the client and work on an onshore/nearshore/offshore basis. The client benefits not only from skilled resources and improved retention but also from “knowledge retention” at a significantly reduced cost of ownership.
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About the Author
Damian leads the sales and marketing organization at Acuity Knowledge Partners. He has more than 20 years of experience in sales, marketing, and product development and is responsible for developing the sales pipeline, achieving sales targets, and building and expanding senior client relationships. Prior to his role at Acuity Knowledge Partners, Damian was Senior Director of EMEA and Africa Sales. He managed a team covering key European markets, including the UK, Germany, and Italy. Prior to joining Acuity Knowledge Partners, Damian was Managing Director – EMEA Sales, Marketing and Client Services for Standard & Poor’s Capital IQ. Earlier, he was Managing Director of S&P’s Investment Services group.
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