The first session of NHC Market Risk Salon focused on Market Risk Governance and it was held at University of Toronto on Thursday April 6, 2017. The lecture was followed by an amazing panel discussion among the big names that you had never believed that you would have a chance to speak with them.
Dr. Yaping Jiang, director from BMO, gave her resourceful presentation on market risk governance. Dr. Yaping Jiang’s speech systematically introduced the key functions of market risk management and three lines of defense respectively. The presentation delivered an idea about how financial institutions identify, measure, control and report market risks; and what guarantee each risk management group keeps their independent and effective judgment while actively coordinates with other groups. To add more color to the background, Yaping jumped out of the financial institutions’ framework and brought the audience to evolution of regulations – Basel Accords.
The apex of the session landed on the panel discussion. Special thanks must be sent to Dr. Dmitri Rubisov here. As a dedicated scholar and successful industry professional, Dmitri invited diversified guests for each session and helped to establish and design NHC Risk Salon from the very beginning.
The knowledgeable guests shared their different opinions on the future development and current conflicts in Independent Price Verification (IPV) and model validation from working perspectives based on years of sharp observations. For future development, Dr. Jun Yuan, Senior Director from RBC, elaborated the space for model improvement. In addition, Dr. Alexander Shipilov, Partner from KPMG, brought interesting ideas from the buy side. He mentioned the increasing demand for risk management in pension funds, insurance companies and other long-term asset management firms. As the first person who tried the crab, capital markets learnt how to manage market risk from trial and error. Now well-developed regulations limited the investment strategies and as a result constrained the risk appetites of the banks, but it is not the case for other financial sectors. When it came to keeping the fairness of risk governances, Dmitri and Alexander had a great discussion. Dmitri encouraged creating proper compensation structures for the traders and risk management teams, that is, eliminating the possibility of breaching the risk limits due to the motivation of higher compensation while Alexander believed healthy company culture and proper regulations would supervise the behaviors of the risk owners and managers.
As the discussion went on, participants could not wait to join the conversation. Classic risk management cases kept being quoted to illustrate the past risk management failures, such as the 7.2 billion dollar fine imposed on Deutsche Bank for mis-selling mortgage-backed securities. The discussion around propriety trading was a heat spot as the audience were eager to learn why it had been called to a stop in most major banks due to risk concerns and whether there would be a chance for its back-to-stage show.
For those who want to build their careers in market risk management, NHC risk salon provides the one of a kind experience for you to figure out what characteristics of risk management would motivate and keep you in this area.