We emphasize and encourage links between academic researchers and practitioners at financial institutions to bring theoretical techniques to bear on real-world issues.
We are focused on identifying the best solutions in global risk practices
The recent financial crisis reinforced the centrality of research in assessing, reporting, and mitigating risks in the financial services sector. From both macro and micro perspectives, our research programs deliver a wide range of insights to assist our members
Research Approach
We emphasise and build connections between academic researchers and industry practitioners at financial institutions to bring theoretical techniques to bear on real-world issues.
The Canadians’ Preparation for Retirement (CPR) project aims to shed light on the risks that may impact future pension plan adequacy of Canadians in a rapidly changing pension landscape.
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.
Examining Canada’s economic experience during the pandemic offers an opportunity to assess the fiscal and monetary policy lessons learned as of early 2021.
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Emerging Risks
Our research team is tasked with identifying new and emerging insights to better understand risks and trends for the financial sector.
Climate change is a critical global concern that presents issues associated with warmer temperatures, increased water scarcity, and more frequent and severe weather events. All these factors can threaten the financial sector and the economic security...
Climate change is a critical global concern that presents issues associated with warmer temperatures, increased water scarcity, and more frequent and severe weather events. All these factors can threaten the financial sector and the economic security. The physical risks of climate change present a clear threat to operations, but new investment opportunities and product offerings are also needed to respond to the changing world needs.
GRI is engaged in expanding financial sectors understanding of climate-related risks and specifically in identifying proactive responses.
Cyber security practices and insights on latest methods are critical elements that need to be identified, studied and understood. Fraud, money laundering, tax evasion, terrorist financing as well as fraudulent insurance claims are just some of the criminal actions the sector must also be vigilant in opposing...
Cyber security practices and insights on latest methods are critical elements that need to be identified, studied and understood. Fraud, money laundering, tax evasion, terrorist financing as well as fraudulent insurance claims are just some of the criminal actions the sector must also be vigilant in opposing.
We expose our members to industry experts and equip them with knowledge to help them mitigate threats, identify consumer trends and capitalize on new opportunities in technology. GRI collaborates with authorities leading the charge in combating these activities to share their expertise with members to aid in developing their response capabilities as well as improving loss rates and operational efficiency.
Global affairs are in a state of disruptive transition. Trends like the growth of emerging economies, the rise of populism, and evolving security threats are increasing multipolarity in international relations, upsetting trade and investment flows, steering markets and shaping regulation...
Global affairs are in a state of disruptive transition. Trends like the growth of emerging economies, the rise of populism, and evolving security threats are increasing multipolarity in international relations, upsetting trade and investment flows, steering markets and shaping regulation. Multilateral organizations, national and sub-national governments and civil society groups often hold competing interests and objectives, and the relationships between these constituencies can shape the business environment in which financial institutions operate.
Collaborating with field specialists in industry and academia, GRI is committed to helping our members grapple with rising uncertainty in global politics and adapt risk management strategies in response to geopolitical developments.
Macroeconomic risk derives from the behaviour of industries and governments and the relationships between them rather than from individual companies. It concerns fiscal and monetary policies, trade and investment flows and political developments on a national and international scale, and the effects of these factors on financial portfolios and company valuations...
Macroeconomic risk derives from the behaviour of industries and governments and the relationships between them rather than from individual companies. It concerns fiscal and monetary policies, trade and investment flows and political developments on a national and international scale, and the effects of these factors on financial portfolios and company valuations. Intermediate variables of particular importance to macroeconomic risk include equities and commodities markets, business cycles, unemployment, inflation, interest rates, prices, and exports/imports.
GRI seeks to support our members as they refine and supplement existing risk management practices in response to changing macroeconomic conditions.
The 2008 financial crisis demonstrated how a seemingly delimited event can have consequences that span far beyond any one company or sector. When a large, interconnected organization fails or experiences significant disruption, a ripple effect can spread through the marketplace, destabilizing economies and causing entire industries to collapse.
The 2008 financial crisis demonstrated how a seemingly delimited event can have consequences that span far beyond any one company or sector. When a large, interconnected organization fails or experiences significant disruption, a ripple effect can spread through the marketplace, destabilizing economies and causing entire industries to collapse. It often behooves intervention on the part of governments and regulators to prevent further contagion and design policy responses that can avert or mitigate similar crises in the future. Organizational leaders must remain vigilant to anticipate and respond to financial instability and systemic phenomena, and GRI stands ready with information and support.
The corrective measures taken by public authorities to hedge against volatility or system failure can also be a source of concern in and of themselves for risk managers. Government oversight, compliance demands and ethical standards impose duties and obligations that financial institutions must satisfy. Failure to keep abreast of regulation and industry best practices can jeopardize a firm’s legal standing, reputation and earnings. GRI is further committed to helping our members improve processes, refine governance systems and build strategies to highlight the most salient regulatory risks.
All organizations are faced with risks that have the potential to negatively affect their business. Risk management practice in financial services focuses on identifying, measuring and analyzing risk to minimize negative impact...
All organizations are faced with risks that have the potential to negatively affect their business. Risk management practice in financial services focuses on identifying, measuring and analyzing risk to minimize negative impact.
GRI assists in first making sure members know what risks exist and promoting the best practices for handling those risks.
Technology disruptions to the financial sector have the potential to impact individuals, disrupt economies, and destabilize governments. Digitalization and technological advances are challenging the way financial institutions operate and creating new consumer expectations...
Technology disruptions to the financial sector have the potential to impact individuals, disrupt economies, and destabilize governments. Digitalization and technological advances are challenging the way financial institutions operate and creating new consumer expectations.
Financial institutions need to change and adapt in response to these expectations with alternative product offerings and services. GRI understands this demand to stay current and is dedicated to empowering our member institutions with the latest information to stay abreast on developing Fintech innovations; gaining insight on their capabilities, understand their risks and identify the opportunities.
Local Factors Determining COVID-19 Exposure and Property Cash Flows: Evidence from the Canadian REITs This project will help improve the understanding of the impact of COVID-19 on Canadian commercial real estate and REIT markets analyzing across property types. The project also aims to identify local factors helping COVID-19 spread and which ones of those matter… View Article
Building resilience in long-term investment strategies – what has the COVID-19 pandemic taught us about climate risks? The purpose of this research is to produce a report that outlines the lessons learned from COVID-19 for investment management, and how these lessons can be applied to building more resilient investment portfolios to climate change. Particularly the… View Article
Investment Risks and Opportunities During a Pandemic: Implications for Institutional Investors This project will employ data on such epidemics as the 2002-2004 Severe Acute Respiratory Syndrome (SARS), the 2009 Swine Flu (H1N1), the 2012 Middle East Respiratory Syndrome (MERS-CoV), and the current COVID-19 outbreak, and will try to answer such questions as: How do pandemics… View Article
Strapped for Cash: How Equity Investments Can Weaken the Finances of Pension Plan Sponsors During CV19-type Crises The research objective of this project is to better understand how a pension plan’s equity investments impact the financial situation of the plan’s sponsor entity during severe economic crises such as COVID-19. The analysis will address three main… View Article
26 October 2020 | National Pension Hub Publications
The goal of this research project is to provide practical guidelines for institutional investors, risk managers, and insurance/bank professionals who are concerned about the potential effect water risk may have on the value and performance of their investment and/or loan portfolio as well as their expected insurance policy payouts.
26 October 2020 | National Pension Hub Publications
This project provides a discussion of the state of the market for robo advisors in Canada that could assist pension participants, comparing that approach to traditional approaches provided by financial advisers or by target date funds.
16 October 2020 | Climate Risk and Sustainable Finance
Project Leads: Kathryn Bakos and Blair Feltmate, Intact Center on Climate Adaptation, University of Waterloo – This research project builds on the report Factoring Climate Risk into Financial Valuation, to create four new Climate Risk Matrices for new sectors: (a) banking, (b) Property & Casualty (“P&C”) insurance, (c) hydro electricity generation, and (d) wind electricity generation.
16 October 2020 | Climate Risk and Sustainable Finance
Project Lead: Bardia Monavari, Alice Insights – The aim of this project is to create a comprehensive framework for financial-decision makers to better understand the sources of physical climate uncertainty on real assets.
16 October 2020 | Climate Risk and Sustainable Finance
Project Leads: Yrjo Koskinen, Ari Pandes and Nga Nguyen, Haskayne School of Business, University of Calgary – This project will focus on how to enlarge and improve private equity financing (angel investing, venture capital, private equity) in Canada leading up to a successful exit (green income trusts, initial public offerings (IPOs), industry sales) for technologies that mitigate greenhouse gas emissions.
16 October 2020 | Climate Risk and Sustainable Finance
Project Lead: Caroline Flammer, Questrom School of Business, Boston University – This research will examine whether green bonds could help in financing the transition to a low‐carbon economy.
16 October 2020 | Climate Risk and Sustainable Finance
Project Leads: Mathieu Boudreault, Jean-Philippe Boucher, Département de Mathématiques, Université du Québec à Montréal (UQAM) & Sébastien Raymond, The Cooperators – The P&C insurance industry has various opportunities to increase Canada’s resilience to climate change. This project assesses a potential solution that incentivizes investments in flood-protection measures and retrofitting.
15 October 2020 | Climate Risk and Sustainable Finance
Project Leads: Blair Feltmate, Kathryn Bakos, Daniel Filippi, and Taylor Legere, Intact Center on Climate Adaptation, University of Waterloo – This project will help mortgage providers better understand their exposure to residential flood risk, and means to mitigate residential flood risk.
5 December 2019 | National Pension Hub Publications
This research provides insights into the distribution and stability of risk aversion and time preferences, where behavioral biases are taken into account.
5 December 2019 | National Pension Hub Publications
The project will help develop a better understanding of how investors react to climate events. As climate change is becoming a more serious problem, we still know little how investors react.
5 December 2019 | National Pension Hub Publications
Many Canadian and U.S. households are forced to retire before their anticipated retirement ages. We study the implication of this on the financial portfolio choice of households.
5 December 2019 | National Pension Hub Publications
Real Estate Valuation: A Deep Learning Approach The project will help develop a better understanding of real estate values in the Canadian property markets using a sample from Montreal housing market. We also aim to work on the commercial real estate markets to improve our understanding in the commercial markets using a US dataset. The… View Article
To significantly improve the assessment of future retirement income adequacy, in a highly granular fashion and using tools that update and significantly improve on previous work in the area, including through the incorporation of detailed pension coverage and saving sources as well as of several sources of uncertainty.
1 January 2019 | National Pension Hub Publications
Drivers of Successful Pension Investing: Lessons from the Canadian Model The classic model of pension investing faces bleak solvency and funding realities that foreshadow a precarious future and will likely result in defined-benefit (DB) plan obsolescence. Over the past forty years, two factors have seriously attenuated the sustainability of DB plans which provide retirees with… View Article
1 January 2019 | National Pension Hub Publications
Decumulation Options for Employer Pension Plan Design: Theory to Practice For years, policymakers, employer pension plan sponsors, consulting professionals, financial advisors, and academics have focused on accumulating retirement wealth. But with Canadian baby boomers now entering retirement – with longer life expectancy, fewer anticipated sources of family support, and a greater dependency on private savings… View Article
Is the future of banking “Open”?: A case study on the strategic implications of open banking in Canada and the US Technological and digital innovation has often been credited for having significant strategic implications for firms by shifting the competitive landscape and changing the market dynamics in an industry (Porter, 1985). It is also believed… View Article
15 November 2018 | National Pension Hub Publications
Designing Pension Plans for Fairness, Sustainability, and Transparency Inadequacy of pure DB and DC plans lead to the development of some hybrid pension designs. Popular examples include the DB-underpin (also known as floor offset), Cash Balance, and second-election options. However, many DB underpin plans have been wound up as the DB guarantee became too costly…. View Article
Digital currencies (DC) represent one of the most disruptive innovations ever in consumer finance, and the Wall Street Journal refers to” one of the most powerful innovations in finance in 500 years.” (Casey and Vigna, Jan. 23, 2015) DC have become the platform for a thriving community of venture-backed start-ups.
Cyber Resilience According to PricewaterhouseCoopers (2016), 61% of Canadian CEOs believe that cyber security is the biggest potential business threat to their organization’s growth prospects. A recent study by Scalar (2017) shows the negative impact of cyber attacks on productivity: in 2016, 53% of Canadian companies reported an incident that resulted in the loss of… View Article
Rotman FinHub LEAD RESEARCHER Andreas Park Andreas Park is an Associate Professor of Finance at the University of Toronto in the Department of Management at University of Toronto at Mississauga, with a cross appointment to the Finance area at Rotman. He has been a University of Toronto faculty member since 2003. His… View Article
2 May 2017 | Financial Stability and Regulatory Compliance
Systemic Risk Benchmarking Study (SRISK) The systemic risk measure (SRISK) originally proposed by Brownlees and Engle (2011), is defined as the expected capital shortfall of a firm conditional on a prolonged market decline. It is a function of a firm’s size, leverage, and risk and can be calculated using publicly available data. Weekly updates of… View Article
Hedging and Risk-Return Frontier in Insurance: an ALM Perspective Asset-Liability Management (ALM) attempts to manage the underlying risk from mismatches between assets and liabilities that arise from fluctuations in the financial landscape. This project creates an ALM strategy for insurance companies that will account for demographic and financial risk while controlling for model risk. This… View Article
13 June 2016 | Financial Stability and Regulatory Compliance
Short Selling Bans In both the 2008-09 crisis and the 2011-12 euro debt crisis, security regulators imposed short selling bans, targeting them mainly at financial institutions. This was motivated by the fear that a collapse in a bank’s stock price could lead them to experience funding problems which would trigger further price drops. Short-selling bans… View Article
Risk Management & Market Liquidity This project focuses on liquidity risk management and its integration with other types of risk, including market and credit risk, from two perspective. The first perspective is that of a financial institution. Here the researchers focus on incorporating liquidity risk in derivatives pricing models, funding value adjustment in derivatives valuation… View Article
13 June 2016 | Financial Stability and Regulatory Compliance
Optimality Criteria for Commodity Futures Margin Requirements Margin requirement is one of the most prolifically debated risk management methods for clearing houses. There are two main schools of thought for setting margin requirements: the prudential approach of Figlewski (1984) and Gay et al. (1986) which argues that the main purpose of margins is to cover… View Article
Optimal and Actual Asset Allocation Decisions in Protracted Low Interest Rate Periods The project conducts an empirical study of the aggregate asset allocation decisions of Canadian, UK and US life insurance companies and pension funds. The project addresses three questions: 1. When making asset allocation decisions, do institutional investors react to changing economic conditions, including… View Article
Low for Long This research analyses the response of pension funds to the prolonged low-interest rate environment. This was achieved by; Looking at what different pensions have actually done since 2008; Determining what the response should have been based on strategic asset allocation models that acknowledge possible changes in the interest rate regime; Examining the… View Article
Financial Systemic Risk: A Network Approach The Financial Systemic Risk project brought together 5 internationally known researchers to address foundational issues that must be resolved before we can fully understand what makes a resilient financial network. How can stability be measured and managed? How should banks be regulated, and what sticks and carrots should be… View Article
Behavioural Finance This project uses the tools of modern finance and risk management to measure and model environmental risks. Environmental risks can be thought of as long run risks which naturally influence portfolio decisions including insurance. This study examines publicly traded environmental portfolios and develops portfolios which will be published on the widely viewed and… View Article
