Dynamic Portfolio Decisions with Climate Risk and Model Uncertainty
12 April 2022 | Pension Hub
Failure to act on climate change ranked No. 1 on the list of top ten global risks by severity over the next ten years according to the World Economic Forum’s annual Global Risks Report.
Sanctions on Russia: Disruptions in Emerging Markets
5 April 2022 | Geopolitical
The role of the Russian economy in the emerging markets has been diminishing since the 2014 sanctions were applied following the annexation of the Crimean Peninsula. Despite a recovery in 2021, Russia’s share in the global economy is now in further decline as the financial impacts of the Russia-Ukraine war are priced into global markets.
COVID-19 Triggers Great Nonfinancial Risk Crisis: Nonfinancial risk management best practices in Canada
31 May 2021 | COVID-19
COVID-19 Triggers Great Nonfinancial Risk Crisis: Nonfinancial risk management best practices in Canada Lois Tullo, Executive in Residence, Global Risk Institute Download the full Report – PDF Version INTRODUCTION The spread of viral disease COVID-19 is the most transformative nonfinancial risk (NFR) of this decade. The uniting of strategy and risk management has never been… View Article
A Frame of Reference: Geopolitical Risks to Canadian Financial Services
6 May 2021 | Risk Management Practices
In this paper, we assess the disruptive transition in geopolitics, from a multilateralist and interconnected world to an emerging paradigm of “Splintered Integration.” In this emerging paradigm, state competition overlays and even pushes back against globalization. Economic interconnectivity remains deep but uneven, with greater restrictions in some domains than in others.
2020-2021 Risk Outlook Survey
26 January 2021 |
2020-2021 Risk Outlook Survey Global Risk Institute Download the Full Report Introduction The world has changed dramatically since we published our last edition of the GRI Risk Outlook Survey a year ago. Top risks that were thought to be at the forefront have been impacted and, in some instances, overshadowed by the events brought about… View Article
A Canadian Transition Pathway: An Urgently Needed Toolset to Finance Canada’s Pathway to a Low-Carbon Economy
19 November 2020 | Sustainable Finance and Climate Risk
The paper discusses the need for a “green” as well as a “transition” taxonomy that will help transform Canada’s economy into a low carbon economy with net-zero GHG emissions by 2050.
Global Survey of Dividend Policy During COVID-19
29 April 2020 | Pandemic Response
Regulators around the globe have been providing guidance to banks and insurance companies on how to proceed with dividends and share buybacks. It will be critical for financial institutions to achieve the appropriate balance between capital preservation for purposes of safety and soundness and the requirement to ensure they have the firepower to support their clients. There have been varied responses around the globe and we have captured them in order to help inform decision making.
Climate Change Tops Risk Correlation Ranking
5 March 2020 | Sustainable Finance and Climate Risk
Climate change is a broad and diverse trend that poses a significant challenge for Financial Institutions (FIs) to address. This paper deploys one approach to weighing and prioritizing these risks, The Global Risks and Trends Framework (GRAFT), to examples of climate change, extreme weather events and natural disaster risk correlations and suggests ways for FIs to address them.
2019-2020 Risk Outlook Survey
17 January 2020 | Risk Management Practices
This marks the fourth year we have conducted the Risk Outlook Survey. The results provide key insight into risks to the Canadian financial system, views on Canada’s financial stability & global economies.
The Current State of Climate Disclosure by Financial Institutions
13 November 2019 | Sustainable Finance and Climate Risk
In our latest publication, we review the current practices that financial institutions are employing, globally, to comply with the recommendations developed by the Task Force on Climate-related Financial Disclosure (TCFD). We call for continued actions by the financial sector, governments, and standard-setting organizations and highlight six key areas of improvement to accelerate climate action and reporting.
Distribution Analysis for Information Risk – A Cyber Quantification Framework
3 October 2019 | Cyber security and Fraud
The Distribution Analysis for Information Risk (DAIR) is a cyber quantification methodology that maps cyber events with a hierarchical risk taxonomy to evaluate operational, business & systemic risk economic capital. DAIR will help organizations quantify cyber risk in a consistent and meaningful way, giving consideration to asset vulnerabilities as well as business and systemic considerations.
Climate Extremes, Aging Dams & Levees and Cascading Failure Impacts Industry Report 2
21 August 2019 | Sustainable Finance and Climate Risk
The overall goal of this study is to develop a framework for rapidly assessing the hazard (i.e. the probability and magnitude of a dam failure) and the exposure (what gets affected by a failure), scalable over many regions for a preliminary ranking of the priority areas of concern. The intended application is for a portfolio level risk analysis by investors, asset managers, and insurance providers.
FINANCIAL INNOVATION SERIES – Building Explainable Machine Learning Systems in Finance: Fuzzy Logic-Based Neural Networks
21 August 2019 | Technology Innovations
A recent surge of interest in Machine Learning (ML) tools within the financial services industry has exposed many challenges of ML applications in financial modelling
The Geopolitics of Technology
15 May 2019 | Geopolitical
In the race to innovate, the geopolitical determinants of big data, AI and 5G are critical to the financial services industry. Emerging technologies like Big Data, Artificial Intelligence and 5G telecommunications are of critical importance to the financial services industry, underpinning new products and services and transforming operational processes.
Enterprise Risk Management Benchmarking Study: A Focus on Financial Institutions
1 May 2019 | Risk Management Practices
The Global Risk Institute, in partnership with the Conference Board of Canada and the Chartered Professional Accountants of Canada, has conducted a benchmarking survey of enterprise risk management (ERM) practices across different industries. In the foreword, we highlight ERM practices in the financial services industry and discuss how they compare to other industries’ practices.
Ethics & Artificial Intelligence in Finance
1 April 2019 | Technology Innovations
From a financial institution’s perspective, AI offers a wide range of potential benefits, but one must ensure that the implementation of this technology is both prudent and ethical. To aid in the understanding of how this can be achieved, this report will introduce AI and detail issues of bias, interpretability, and data security and privacy as they relate to the ethical use of AI algorithms by financial institutions.
FINANCIAL INNOVATION SERIES – Artificial Neural Networks in Financial Modelling
21 March 2019 | Technology Innovations
In this paper, we discuss Artificial Neural Networks (ANNs), one of the most common and complex Machine Learning tools. After a non-technical introduction to ANNs, we examine the risks associated with the application of this algorithm to financial data.
2019 Risk Outlook Survey
7 January 2019 | Risk Management Practices
2018 marks the third year of the Global Risk Institute’s Annual Risk Outlook Survey of our member organizations’ risk outlooks for the coming year. The results of this survey provide insights into our members’ views on key risks, on the stability of their individual institutions and the overall Canadian financial system, and on the strength of major global economies. Survey responses were obtained from a range of financial institutions including banks, insurance companies, and pension funds.
United States-Mexico-Canada Agreement
6 November 2018 | Geopolitical
Canadian financial service professionals have watched negotiations with a keen eye to see what changes could be made to the original NAFTA provisions and what the possible implications might be for the industry. With an agreement in place, it is possible to begin to evaluate the new elements of the USMCA and point to the kinds of first and second-order effects of which financial risk managers should be aware.
Managing the Risk of Web Security
5 November 2018 | Cyber security and Fraud
Managing the Risk of Web Security Author: Henry Harrison, Co-founder & CTO of Garrison Technology The author is an independent contributor to the Global Risk Institute and is solely responsible for the content of the article.
The Risk to Client’s Financial Data
13 September 2018 | Cyber security and Fraud
It has been said that data is the new oil, and if that is the case, your clients could be sitting on a significant unclaimed reservoir. Helping clients claim their rightful ownership of data assets could enable them to both harvest value and enhance their cyber security.
FINANCIAL INNOVATION SERIES – Smart Contracts
13 September 2018 | Technology Innovations
In this paper we discuss smart contracts – computer programmes running on top of a blockchain. We start with some intuitive examples that demonstrate the concept of a smart contract and then consider the Ethereum platform, the most notable platform for decentralized applications. We also outline some applications of smart contracts and discuss associated risks.
Digital Technology: Promise or Peril?
27 August 2018 | Risk Management Practices
The trend of increasing Cyber Dependency has been highlighted by the World Economic Forum as one of the most impactful trends changing society today. Organizations must be able to view digital innovations and their dependency on them in a systematic way to truly visualise that which is a threat and that which may signal opportunity.
Extracting Value from Stress Testing
7 August 2018 | Risk Management Practices
This paper explores how firms can benefit by exploring stress testing to examine a wide array of issues. Additionally, Mr. Talwar and Mr. Turnbull explore the value of stress testing to senior executives, board members and probably most particularly to the Risk Management Committee. The authors conclude with the Top 10 Questions Board members should consider when reviewing stress scenarios with Senior Managements.
Diversification risks of Canadian hedge fund strategies
7 August 2018 | Pension Hub
Which Canadian hedge fund strategies minimizes downside risk during traditional market declines? Which strategies are most correlated with traditional broad market indices and to other strategies? These are typical questions that form the basis of any due diligence process of hedge funds and which this article addresses. We examine the potential diversification risks to the selection of hedge fund strategies.
FINANCIAL INNOVATION SERIES – Blockchain and Its Applications to Cryptocurrencies
4 June 2018 | Technology Innovations
This paper provides a non-technical introduction to blockchain technology using cryptocurrencies as an illustrative example. We describe the mechanics of blockchain and outline some risks associated with the existing cryptocurrencies.
Will AI take over active fund management?
4 June 2018 | Technology Innovations
Research in the field of Artificial Intelligence (AI) is growing exponentially, and as a result, applications of the technology in different industries are constantly being discovered. This paper explores how AI can be applied to the field of fund management, and specifically, how it can be used to manage active funds.
GRAFT: Cyber Risk Correlations in the GRAFT Framework
23 May 2018 | Risk Management Practices
This article is the first in a series that will focus on applying risk correlations to further a robust approach to the management of emerging risks. It applies the correlation matrix from the Global Risks and Trends Framework (GRAFT) to a specific topic in order to highlight risk interdependencies, and to assist in the analysis of strategic implications.
FINANCIAL INNOVATION SERIES – Risks and Rewards of Financial Innovation
2 May 2018 | Technology Innovations
This report will consider several vantage points including that of the incumbent financial institution, the consumer, and the financial system as a whole. We will also offer some insight with regards to potential risk-mitigation strategies and commentary on the potential for fintech-related risks to become systemic.
Systemic Cyber Preparedness
2 May 2018 | Cyber security and Fraud
Cyber intrusion and cyber resilience are topics receiving tremendous attention, discussion and action currently and for good reason. Financial firms fend off millions of cyber threats daily. This paper frames the learnings from the most recent efforts to combat global, systemic risk – the 2008 Global Financial Crisis.
Risk Governance: Evolution in Best Practices for Boards
22 March 2018 | Risk Management Practices
The role of the board has expanded and expectations for performance have increased. This report we emphasize that the most important role of the board is risk governance, and we provide insight to how directors can more effectively oversee risk taking activities.
What Makes a Good Risk Manager?
8 March 2018 | Risk Management Practices
ARTICLE – The focus today is to develop risk managers so that they can acquire a breadth of experience across multiple risk disciplines. Traditional risk capabilities such as credit and market risk are still necessary; however, these skills are no longer sufficient on their own.
2017-2018 Risk Outlook Survey Results
31 January 2018 | Risk Management Practices
This year marks 2nd years GRI has conducted their Risk Outlook Survey to assess the risk outlook of our member organizations for the coming year. The results of this survey provide insights into our members’ views on key risks, the stability of the Canadian financial system, and the strength of major global economies.
The Secret Life of Culture: Unveiling Culture Risk in the Age of Machine Learning
19 January 2018 | Risk Management Practices
In many organizations, across many industries, the most vital opportunities to drive growth, as well as the most pressing risks, start with people.
The Challenges of Implementing IFRS 9 – Part 2
7 September 2017 | Financial Stability and Regulatory Compliance
At the GRI we expect the transition to IFRS 9 to present challenges to the various stakeholders. There is a clear need for education and discussion across the financial services industry as we approach the implementation date this November. In this paper we focus on the implications of IFRS 9 going forward, particularly as Canadian banks are required to “go live” in November.
President Trump’s Paris Pullout: What it means for financial institutions
2 August 2017 | Sustainable Finance and Climate Risk
Throughout his campaign for the U.S. presidency, Donald Trump expressed skepticism about climate change and promised to repeal Obama-era climate policies. On June 1, 2017, President Trump made good on one of his biggest climate-policy promises by announcing that the United States would withdraw from the Paris Agreement. This paper discusses the impacts of this decision.
Mind the Gap: Addressing Gender Imbalances in Leadership (and a Case for Paternity Leave)
25 July 2017 | Risk Management Practices
This paper includes an examination of the risks associated with continuation of the workplace gender gap, and the rewards for firms that achieve gender diversity. It makes a case for dedicating a portion of parental leave exclusively for men, on the basis that gender equality at home is a prerequisite for gender equality at work. Other recommended actions to foster gender equality are also included.
Cyber Risk & Security
4 July 2017 | Cyber security and Fraud
On April 11th, Duo Security and the Global Risk Institute (GRI) co-hosted an executive breakfast in Toronto to provide an update on current security trends and key information that leaders need to know.
CAT Bond – Premium Spreads
19 June 2017 | Risk Management Practices
The cost of natural disasters is a major risk for insurers. Recent examples of major catastrophic events, and the associated losses, include Hurricane Katrina ($84 billion), the 2008 Sichuan earthquake ($148 billion), the 2011 Tohoku earthquake and tsunami in Japan (more than $300 billion) and Hurricane Sandy ($75 billion).
Breaking Bad Data & Solving for AML
6 June 2017 | Technology Innovations
With this article we are kicking off a focus on the usage of Big Data and Advanced Analytics in the area of anti-moneylaundering (AML). AML has been a particularly difficult solution for global banks as the evolving regulatory standards call for banks to be able to readily monitor all transactions across the firm, which requires an in-depth knowledge of their clients and their clients’ counterparties (and often times the correspondent banks).
Shadow Banking: Non-bank Credit Intermediation Heightens Risks for the Global Financial System
19 April 2017 | Financial Stability and Regulatory Compliance
As the shadow banking sector continues to grow, what are the impacts on the overall financial system? How are global financial markets affected by shadow banks and what are the areas to watch? Sheila Judd, Executive in Residence at Global Risk Institute discusses these ideas in this paper on Shadow Banking.
The Challenges of Implementing IFRS 9-Impairment
28 March 2017 | Financial Stability and Regulatory Compliance
Canadian Banks and credit unions are in the midst of implementing one of the most challenging accounting changes in recent memory, when they move from an Incurred Loss (IAS 39) to an Expected Credit Loss (“ECL”) (IFRS 9) accounting standard. This article provides an overview of IFRS 9 and its potential impacts.
Equity Holding Preferences of U.S. based Insurance Companies in Low Interest Rate Periods
22 March 2017 | Macroeconomic Risk
Equity Holding Preferences of U.S. based Insurance Companies in Low Interest Rate PeriodsRelated Project: Optimal and Actual Asset Allocation Decisions in Protracted Low Interest Rate PeriodsAuthor: C. Krishnamurti, N. Papagiorgiou, F. RadmehrProfessor Chandrasekhar Krishnamurti is the lead research contributor for the Global Risk Institute on Optimal and Actual Asset Allocation Decisions in Protracted Low Interest Rate Periods…. View Article
AI Frontiers: Where We are Today and the Risks and Benefits of An AI Enabled Future
7 March 2017 | Technology Innovations
“Artificial Intelligence” is a very powerful narrative. In fact, today, many leading thinkers envision a future where machines surpass humans in intelligence. In Part One of our two part series, we assess of the potential near term risks and benefits of Artificial Intelligence. Later, in Part Two, we explore how AI is expected to impact Financial Services and what specific use-cases we expect to see over the next 1-3 years.
An Improved Application of the Variable Annuity
28 February 2017 | Risk Management Practices
Variable annuities have been used as a payout mechanism in some US pension plans that are qualified under the U.S. Internal Revenue Code for many years. This innovative payout technique has also been introduced in a large pension plan in British Columbia that is registered under the Canadian Income Tax Act. Under this technique, the registered pension pl an establishes a “hurdle rate”.
President Trump’s Administration: The Impact on Financial Services and Regulation
8 February 2017 | Macroeconomic Risk
On Feb 2, GRI and Rotman hosted a panel of experts to discuss the possible impact the Trump administration will have on the regulation of financial services. This article is a synthesis of the views of the panelists.
How Natural Language Processing is Reshaping the World of Finance
15 January 2017 | Technology Innovations
Natural Language Processing is a sub-section of the artificial intelligence domain that is focused on teaching computers to understand natural human languages. NLP encompasses a range of theory-motivated computational techniques which attempt to address the disconnect between human and computer languages.
A Methodology for Quantum Risk Assessment
5 January 2017 | Cyber security and Fraud
Quantum computing is a growing technology that is rapidly changing how electronic communications and digital transactions will take place in the near future. In this article, we look at how organizations can investigate and mitigate the risks associated with the changes that will be brought about by this emerging technology.
Summary of Key Risks in 2017
9 December 2016 | Risk Management Practices
Initial Perspectives on 2017 – This view is consistent with the consensus of our members, who participated in our key risk survey. Not surprisingly members identified Consumer Debt / Canadian Housing Market, Rising Interest Rates and Cyber Risk amongst their top concerns for 2017.
Market Liquidity: One door closes, another one opens?
28 November 2016 | Financial Stability and Regulatory Compliance
Market liquidity is in a transition and the capital markets are undergoing a significant transformation. Like any transition, this one too has its share of challenges and yet, provides many opportunities to participants.
A Target GDP Approach to Risk and Return in Climate Change Policy
14 November 2016 | Sustainable Finance and Climate Risk
Climate change is widely recognized as a serious risk that requires worldwide governmental action. Failing to act on climate change including the risk to the world’s financial systems by threatening financial resilience and longer-term prosperity.
Are target date funds dinosaurs? Failure to adapt can lead to extinction.
14 November 2016 | Pension Industry
Conventional defined benefit (DB) plans are becoming a thing of the past. Do target date funds need to adapt? in this papers we explore adaptive investment strategies and show that they significantly outperform typical Target Date Fund strategies.
Digital Banking Manifesto: The End of Banks?
14 November 2016 | Technology Innovations
Thanks to new developments in data technology and in mobile telecommunications adoption, we see the potential rise of a third wave of innovation in banking. In this paper we will outline the key features, benefits, and strategic imperative of the Digital Bank of the Future
Low rate ever higher debt
3 October 2016 | Financial Stability and Regulatory Compliance
The explosion of debt levels world-wide, fueled by extremely low interest rates, may be the biggest and most immediate risk facing the financial sector.
Quantum Computing – An introduction
22 September 2016 | Technology Innovations
Computing capacity continues to expand and transform the world we live in. With computing capacity doubling every two years, as we cram more transistors onto microprocessors. And what is the result?
Quantum Computing and Cyber-security
5 September 2016 | Cyber security and Fraud
Emerging quantum computing technologies threaten to undermine even the most sophisticated cybersecurity systems installed by businesses and governments
Defined Benefit Plans Are Disappearing
15 August 2016 | Financial Stability and Regulatory Compliance
Are variables the answer? In an effort to de-risk, many private companies and public institutions are moving to defined contribution (DC) plans.
Variable Annuities: Fees too high or too low?
15 August 2016 | Financial Stability and Regulatory Compliance
To illustrate the basic idea of how a Variable Annuity can mitigate this risk, we examine a very simple product: a Guaranteed Minimum Withdrawal Benefit (GMWB).
Not too big to fail!
11 August 2016 | Financial Stability and Regulatory Compliance
The 2008 financial crisis resulted in bank failures, tax payer funded bail outs and new regulations. “Never again” say bank regulators and politicians.
Canadian fintech innovation: ATB Financial leads blockchain innovation
26 July 2016 | Technology Innovations
ATB financial embarked on a journey to make sense of blockchain technology by successfully leading blockchain innovation with Germany’s ReiseBank
Why technology is not enough to fend off a cyber attack
26 July 2016 | Cyber security and Fraud
Fending off cyber attacks requires more than anti-virus technology. It demands a shift in culture.The weakest link is often people.
Construction of Mortality Indexes
19 July 2016 | Financial Stability and Regulatory Compliance
The Do’s and don’ts – What Makes a Good Mortality Index? With appropriate mortality indexes, one can construct standardized mortality-linked securities.
Mitigating Longevity Basis Risk With A Reinsurance Mechanism
19 July 2016 | Evolution of Capital Markets
The market for longevity risk transfers started in the UK about a decade ago. Since then, the market has seen some significant developments in terms of the number and size of deals.
Climate Change: Why Financial Institutions Should Take Note
12 July 2016 | Sustainable Finance and Climate Risk
Climate change is one of the most significant environmental, economic and social challenges of our time. Download a copy of this report to learn more about this relatively new risk category whose impact on organizations will continue to grow.
Say Hello To “Basel IV”
5 July 2016 | Financial Stability and Regulatory Compliance
Regulatory rules governing banks – “Basel IV” risks undermining investment made in risk management human capital & technology, as well as perversely incenting banks to hold higher-risk assets
Cyber Risk and Security in Canada
28 June 2016 | Cyber security and Fraud
Canada can become a haven against cyber attacks if we invest in and further coordinate efforts
An efficient machine learning approach
20 June 2016 | Technology Innovations
Machine Learning (ML) is a rapidly developing technology with applications in a wide variety of areas
Blockchain, Cryptoeconomics, and the Disintermediation of Trust
9 June 2016 | Technology Innovations
As the technology that creates a distributed ledger, blockchain is creating significant waves of disruption in industries, processes and business models revolving around the centralization of trust.