The PRA's new policy on solvent exit planning for insurers aims to ensure orderly market exits. Applicable to most UK insurers, it requires them to develop and implement Solvent Exit Analyses and, when necessary, detailed Execution Plans. The policy comes into effect on June 30, 2026.
In the ever changing landscape cybersecurity landscape, Jeff Crume reviews his predictions for last year and peers into his crystal ball to see what may be coming in 2025 and beyond especially when it comes to how AI will change the threat landscape to possible solutions.
This research develops a taxonomy of operational risks impacting corporate sustainability. A literature review and analysis of 100 business cases reveal relationships between these risks, their causes, and their economic, social, and environmental consequences. The findings help companies classify and manage sustainability-related operational risks, though the specific relationships may vary across sectors and individual cases.
This lecture explores how probability theory can quantify uncertainty, chance, and even ignorance. He demonstrates methods to measure the quality of these quantified uncertainties. He also humorously admits a miscalculation during the lecture regarding paired comparisons within the audience.
The FSB proposes nine policy recommendations to manage NBFI leverage risks, focusing on improved risk monitoring, data, disclosures, market oversight, and cross-border cooperation. These aim for consistent regulatory treatment globally. Public comment is open until February 28, 2025, with a final report due mid-2025.
The study finds that banks engaging in greenwashing practices contribute to increased systemic risk, especially larger and less efficient ones. The market values actual ESG performance more than disclosures, and strong environmental performance helps mitigate this risk.
Generative AI (GAI) is transforming banking risk management, improving fraud detection by 37%, credit risk accuracy by 28%, and regulatory compliance efficiency by 42%. GAI enhances stress testing but faces challenges in privacy, explainability, and skills gaps. Its adoption, led by larger banks, demands holistic strategies for equitable industry impact.
A 2024 DORA Dry Run, involving ~1,000 EU financial entities, showed promising data quality for information registers. 6.5% passed all checks, and 50% passed most. The ESAs, aiming for high-quality registers by 2025, provided support tools and feedback, and will continue workshops to ensure compliance.
AI adoption in finance introduces risks like model inaccuracies, data security issues, and cyber threats. FINMA notes many institutions are at early development stages for AI governance. It urges better risk management to protect business models and enhance the financial center's reputation.
The ECB has decided to keep capital requirements largely unchanged for 2025 due to the strong performance of banks. However, specific banks will face additional capital requirements due to insufficient provisioning for non-performing loans and high exposures to leveraged loans. The ECB emphasized the need for banks to address governance, risk management, and operational resilience, particularly in light of macroeconomic threats and digital transformation challenges.