We emphasize and encourage links between academic researchers and practitioners at financial institutions to bring theoretical techniques to bear on real-world issues.

Risk Management Practices

All organizations are confronted with risks that have the potential to negatively affect their business. Risk management practices in the financial services sector focus on identifying, measuring and analyzing those threats to reduce material, reputation, opportunity and other costs.

GRI helps members to understand the risks they face and promotes industry best practices.

Governmental Responses and Firm Performance During the Pandemic: An Integrated Assessment

Governmental Responses and Firm Performance During the Pandemic: An Integrated Assessment Edina Berlinger, Department of Finance, Corvinus University of Budapest, Hungary Dieter Gramlich, Baden-Wuerttemberg Cooperative State University Heidenheim (DHBW), Germany Thomas Walker, John Molson School of Business, Concordia University, Montreal, Canada Yunfei Zhao, John Molson School of Business, Concordia University Montreal, Canada Download the full paper -… View Article

Financial Innovation Series: Artificial Intelligence and Machine Learning: A Model Risk Management Perspective

FINANCIAL INNOVATION SERIES: Artificial Intelligence and Machine Learning: A Model Risk Management Perspective Alexey Rubtsov, PhD, Senior Research Associate, Global Risk Institute Download the full Report – PDF Version INTRODUCTION The last decade has witnessed a large-scale adoption of Artificial Intelligence and Machine Learning (AI/ML)  models in the financial sector. Although there are many benefits… View Article

Canada’s Pension System and Aging Population: 2021 Census Insights

Canada’s Pension System and Aging Population: 2021 Census Insights Bruce Choy, Managing Director, Global Risk Institute Sally Shen, Research Associate, Global Risk Institute Download the full paper – PDF Version

World Economic Forum’s Global Risks Report 2022: The Canadian Perspective

World Economic Forum’s Global Risks Report 2022: The Canadian Perspective Victoria Guo, Director, Research, Global Risk Institute Download the full Report – PDF Version Abstract The World Economic Forum published its Global Risks Report 2022 (the Report) in January, with the latest Global Risks Perception Survey (GRPS) results in fall 2021. The Report is based… View Article

Emerging Disruption: Buy Now Pay Later in Canada

This report examines the potential of BNPL from a Canadian perspective. We introduce the current state of BNPL in Canada and the potential evolution pattern in the future. In addition, various risks associated with the BNPL disruption are discussed to help financial sector leaders better assess opportunities in the market.

GRAFT Update on World Economic Forum’s 2022 Most Severe Risks

World Economic Forum’s 2022 Risk Report highlight’s global environmental concerns as top of mind, followed closely by Societal concerns metal health deterioration and Social cohesion erosion, and continuing Technological concerns failure of cyber security and in Canada a potential Debt Crises and Geoeconomic confrontations. 

2021-2022 Risk Outlook Survey

This paper presents the results of the latest survey. Key findings on priority risk issues facing the Canadian financial system and its financial institutions are first discussed. It is followed by perceptions of our members on the global economic outlook. The report concludes with risk insights drawn from this year’s survey with which we aim to inspire our audience when thinking and planning forward.

Mortgage Foreclosure, Forbearance, and Refinancing

This paper examines the effect of foreclosure prevention policies during the pandemic on refinancing activities in the United States.

FINANCIAL INNOVATION SERIES – Machine Learning: Unsupervised Learning in Finance

The last decade has witnessed a large-scale adoption of machine learning tools in finance. According to the latest report  by Refinitiv, the number of data science teams in financial services firms have risen by more than 260 per cent since 2018 (see Refinitiv 2020).

COVID-19 Triggers Great Nonfinancial Risk Crisis: Nonfinancial risk management best practices in Canada

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

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.

Non-GAAP Financial Measures: Caveat Emptor

Today, approximately 20 per cent of the financial information used in making investment, lending and capital allocation decisions is prepared in accordance with generally accepted accounting principles (GAAP). 

Primer on Gross Debt/GDP Risk in the Shadow of COVID-19: Canada Joins Top Debtor Nations

As the gross debt/GDP ratio grows, Canada faces the risk of increased interest coverage payments leading to reduced future fiscal flexibility. An acknowledgement of this increased risk must be met with an understanding of a plan to build the economy and to pay down the deficit. This raises a number of issues that need to be debated to address the risks coming in the future.

Adapting to COVID-19: A Behavioural Lens on Financial Institution Resilience

With Canada now in its second year of living with COVID-19, the pandemic continues to pose ongoing and new challenges for financial institutions (FIs) in building resilience. Beyond unprecedented health, financial and economic risks, FIs face future challenges managing staff, operations and client relationships during the broader vaccine rollout.

Operational Resilience: Where Are We?

There are a number of approaches under consideration and whether regulators ultimately respond by providing workable globally-compatible guidance is yet to be determined. Regardless, firms need to act now to better protect their clients, themselves and overall market integrity.

GRAFT: COVID-19 Implications

The world has been at the edge of a tipping point for over a year. Spread of viral disease was the risk that toppled the market, closed businesses and borders, made remote work a norm, and unfortunately has taken an unprecedented number of lives. The interrelationship of Global Risks and Trends outlines the path that led the world to its current state, and provides a framework for identifying the implications of COVID-19, and the path forward.

COVID-19 and 3rd Party Suppliers: Questions Risk Managers Should be Asking

Given the significant and increasing reliance on outsourcing and 3rd party supplier relationships in the financial services sector, risk managers should also be evaluating potential impacts on service levels from developments relating to the COVID-19 situation. This brief covers the questions to ask of your own institution, and your 3rd party suppliers.

Risk Management Has Moved to the Top of the House – Women Should Move with It

In response to the fast-changing conditions and expectations in today’s financial markets, risk leaders need to be more proactive than ever before. We have entered the era where leaders will not be able to access the C-suite or board if they haven’t had a stint in risk management.

2019-2020 Risk Outlook Survey

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.

What Keeps Bank Board Directors Awake at Night

Chief Risk Officers are constantly asked this question. However, it’s not just CRO’s or their executive management teams, that should have trouble sleeping. With an ever-increasing focus on governance, board of directors must focus on risks, traditional and emerging, that could impact the health and stability of their organizations.

Building a Strong Risk Culture

Even the most casual observer will notice that newspaper headlines continue to be fueled by a steady stream of corporate scandals, malfeasance, and other assorted conduct and risk management “missteps”. A commonly recurring theme in much of the ensuing narrative and analysis is that these events are often directly attributable to some form of material “failure of (risk) culture”. In this paper, we explore a working definition of a “strong risk culture” as a guide to identify key management practices and conditions that can often play a critical role in shaping an organization’s risk culture.

Enterprise Risk Management Benchmarking Study: A Focus on Financial Institutions

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.

2019 Risk Outlook Survey

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.

Back to the Future: 2007 to 2030

Are Emerging risks foreshadowing a Systemic Risk Event? In this paper, we do a comparison of the GRAFT matrix over several years to gain insight into potential systemic changes that may be on the horizon.

Addressing Culture and its Associated Risks in Financial Institutions

This article focuses on the challenge of changing organizational and sub-unit cultures to better manage the many forms of cultural risk (see sidebar) and thereby improve organizational performance. We propose that a focus on key character dimensions in all employees, but specifically those in risk leadership roles, will result in accelerated culture change, improved risk management and better organizational outcomes.

Digital Technology: Promise or Peril?

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

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.

GRAFT: Cyber Risk Correlations in the GRAFT Framework

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.

Conflicted Advice About Portfolio Diversification

Investors are often encouraged by financial advisors to “roll-over” their 401(k) into Individual Retirement Accounts (IRAs). This work investigates the soundness of this investment advice and analyzes the diversification of large 401(k)-type plans that offer five basic investment options.

GRAFT: Pension Case Study

The Pension Case Study provides the overview of the concept of the Global Risk and Trends Framework (GRAFT). This report provides the process, implementation, and outputs of the GRAFT process.

Risk Governance: Evolution in Best Practices for Boards

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?

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

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.

GRAFT Case Study: Government of Canada

GRAFT – The Global Risks and Trends Framework – is a new and innovative approach designed to help organizations identify, assess and respond to global risks and trends in order to avoid pitfalls that could threaten an organization’s long-term survival. This Government Case study provides the process, implementation, and outputs of GRAFT.

GRAFT: A Global Risks and Trends Framework – Overview

GRAFT – The Global Risks and Trends Framework – a new and innovative approach designed to help organizations identify, assess and respond to global risks and trends in order to avoid pitfalls that could threaten an organization’s long-term survival, or conversely to leverage for the benefit of the organization.

Mind the Gap: Addressing Gender Imbalances in Leadership (and a Case for Paternity Leave)

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.

A Comparison of Survey and Incentivized-Based Risk Attitude Elicitation

A Comparison of Survey and Incentivized-Based Risk Attitude ElicitationAuthors: Jim Engle-Warnick, Diego Pulido, and Marine de MontaignacRelated Project: Behavioral FinanceThe Global Risk Institute funded this research along with the preparation of this paper.Download Summary: EXECUTIVE SUMMARYOne of the duties of financial advisors is to assist investors with building a portfolio that fits their needs and preferences. An… View Article

CAT Bond – Premium Spreads

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).

New Approaches to Performance Evaluation

Campbell Harvey`s presentation on New Approaches to Performance Evaluation at the International Centre of Pension Management (ICPM).

An Improved Application of the Variable Annuity

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”.

Illiquidity Premia in the Equity Option Market

Illiquidity Premia in the Equity Option MarketRelated Project: Risk Management & Market LiquidityAuthors: Peter Christoffersen, Ruslan Goyenko, Kris Jacobs, and Mehdi Karoui .The Global Risk Institute funded this research along with the preparation of this paper. This paper is a summary of the larger research report“Illiquidity Premia in the Equity Option Market”.GRI members can download the full… View Article

Summary of Key Risks in 2017

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.

Risk Management in the Middle East

Risk Management in the Middle East Presentation by Frank MasseyFrank Massey, Vice President and Head of Risk Management with Riyad Bank, speaks on the Opportunities and Challenges of Managing Risk as an Expatriate. Gain insights and lessons learned from a Canadian expatriate in building a risk management department from ground zero. Find out what you can do… View Article

Optimal Delta Hedging for Options

Delta hedging is an important way in which traders manage the risk in a portfolio of options. This article discusses those options.

Investment Behaviour in the Laboratory

Investment Behaviour in the Laboratory Related Project: Behavioural Finance Preliminary  for GRI Working paper  November  16,  2015 Abstract This paper is an experimental study of dynamic investment decisions. The  goal  of  the  experiment  is  to  test  theoretical  predictions of the effect of human capital on investment. Subjects make repeated portfolio allocation decisions, allocating their money between… View Article