Rewarding innovation in the face of market adversity
We are once again in the midst of a crisis that will has turned the world upside down – and will continue to shape the financial landscape for decades to come. There is no better time to be running our annual Asia Risk awards and to ask firms to demonstrate how they have been able to add value to clients in the face of intense market adversity.
A little more than 12 years on from the start of the last global financial crisis and the importance of sound and robust risk management practices is again at the forefront of everyone’s mind. This time, though, the cause-and-effects are very different.
Whilst the crisis in 2007/2008 was ignited by over-leveraged derivatives positions that toppled over (and compounded by an unhealthy cocktail of negligence and malpractice from banks and regulators), the latest market pandemonium has been caused by a break in the supply chain and shrinking demand, prompting a severe collapse of the global economy.
Some may see the financial industry as the victim here: attacked by forces from outside and now suffering from a chain of events that is largely beyond its control.
But in amidst of all the unpleasant destruction that the Covid-19 pandemic has wrought around the world, there is a clear opportunity for financial institutions and risk managers to shine. Risk management skills are being put to their maximum test: what clever ideas have been put in place to navigate these choppy waters, and how has innovation been used to cap downside risk whilst maximising the upside?
Funky investment products are always interesting but remember Asia Risk also covers hedging – the winner in most categories will need to demonstrate fluency in hedging for end users as well as structuring. If you just enter a list of structured products don’t expect to find yourself collecting an award in September.
Bureau Chief, Asia
Blake Evans-Pritchard is bureau chief, Asia, for Risk.net based in Hong Kong. Before taking on his current role, he spent three years covering regulatory issues across Asia for Risk.net, including implementation of Basel III and other international standards in regional jurisdictions. Previously, he spent five years in Brussels writing about the European Union’s financial services sector and competition policy and a number of years as Africa editor for a news service covering post-conflict restitution around the world.