Financial Services Risk Management

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Areas of focus:
Decision-makers today must manage, mitigate and capitalize on the risks they know; respond to new risks as they emerge; and manage a range of compliance activities. EY’s Financial Services Risk Management professionals help assess options and improve processes, and assist with the management of risk as an enterprise discipline. Whether you are facing credit risk, market risk, operational risk, liquidity risk, quantitative analysis or regulatory compliance challenges, we have the experience to help.

We can assist you in these areas:

  • Credit risk
    The requirements of Basel II and Solvency II have increased the focus on credit risk measurement and management and its contribution to economic capital. Continuing innovations in risk mitigation techniques — through securitizations, collateral management and credit protection — have created opportunities for institutions to manage their exposures proactively. Working closely with our clients, we assist with improving frameworks, enhancing credit risk strategy and governance, meeting regulatory requirements, defining and validating models and methodologies, optimizing risk-technology infrastructure, refining internal and external reporting, and determining economic capital and overall capital management strategies.
  • Economic capital and risk-adjusted performance measurement
    Advances in underlying risk measurement allow for increased sophistication when considering risk in capital allocation and performance measurement. The emergence of these methods allows an organization to better enhance shareholder value and meet regulatory expectations, such as Basel II Pillar 2. We assist with the development of economic capital and risk-adjusted performance measurement frameworks that aggregate risk exposures and consistently measure performance across diverse products. Leveraging this framework allows an institution to move beyond the traditional accounting, regulatory and rating-agency methods of assessing capital and performance and can lead to improvements in capital allocation, performance measurement and budgeting.
  • Enterprise risk management and governance
    High-profile risk management failures, increased regulatory scrutiny and the diversity and complexity of organizations have brought enterprise risk management and governance to the forefront. The board of directors and company officers must validate that there is comprehensive identification of risk and develop approaches that integrate risk management and governance processes. We will assist with promoting a risk management culture of accountability throughout an organization, strengthening the effectiveness of risk oversight, improving the communication of risk information and further integrating risk measurement processes. We also help devise and implement practical enterprise risk management and governance structures.
  • Liquidity risk
    Financial services institutions that have the processes, measurement tools, technology and reporting in place to aggregate liquidity information from across their organizations are better able to weather storms. And with funding often costly and difficult to secure, institutions can no longer afford silo organizational structures, disparate systems and the absence of actionable information. Our deep understanding of the treasury function, risk measurement processes and regulatory requirements across jurisdictions is balanced with the skill to manage business improvement projects within complex, global organizations. We have advised boards, the C-suite, treasury and other risk professionals on the ways an institution can raise the profile of liquidity risk, fully embed liquidity risk management within a robust risk management culture and control framework and deliver the right decision-making information.
  • Market risk and quantitative advisory services
    Constantly evolving financial markets, investor and regulatory scrutiny and new operating models require institutions to actively monitor, evaluate and enhance market risk measurement and management practices. We have a global network of quantitative analysts and business professionals that understand the processes and tools critical to the development of an effective market risk framework. We advise clients on Value at Risk analysis, risk measurement and stress testing, financial instrument valuation and hedge effectiveness calculations.
  • Operational risk
    Significant operational losses, coupled with regulators' increased attention and requirements under Basel II and Solvency II, have heightened the awareness of operational risk management. Companies are increasingly looking to link operational risk initiatives with related activities such as Sarbanes-Oxley and other compliance requirements. We have created an integrated operational risk framework aligned with Basel II that advocates a balance between quantitative and qualitative approaches to operational risk. This framework helps financial institutions implement crucial processes required for sound operational risk management, including governance, risk identification, risk control assessments, key risk indicators, loss data, economic capital and risk reporting.
  • Regulatory compliance 
    With increased supervisory and shareholder scrutiny and the rising prominence of reputation risk, it is critical that organizations are in compliance with and prepared for new regulatory initiatives. The principles-based approach of many new regulations requires a perceptive, practical understanding of effects on business practices and evolving regulatory expectations. Our regulatory and compliance advisory capabilities cover a broad range of risk management, supervisory and compliance issues, including the co-development of risk policies and procedures for the oversight and management of risk; the establishment of compliance risk assessment frameworks and the related monitoring tools; regulatory initiative preparation; business practice compliance; and internal and external regulatory reporting.