Risk

Risk management and innovation can be balanced in financial services

Risk management and innovation can be balanced in financial services

The world we live in today features both high risk and high innovation. To some, innovation creates risk. The term “disruption” as at it relates to innovation indicates next-generation products, services and operations. The term “disruption” as it relates to risk management may stoke fear in the heart of the Chief Risk Officer.

If you ask a Chief Risk Officer what keeps a company running, the answer might be about strong foundational elements – identifying, prioritizing and quantifying risk – and implementing strategies and solutions to keep risk at bay.

Three myths in financial services risk management

Three myths in financial services risk management

When it comes to financial services risk management, many financial institutions seem to have risk management nailed down, from system implementation through processes and governance. However, when analysts at MountainView Financial Solutions, a Situs company, dive deep into risk management discussions with industry partners, we find that even the most well-organized and well-staffed institutions require regular self-evaluation to determine whether their approach to risk management is both tactical and strategic. While many of the challenges we see are unique to a specific risk function, often such challenges are a byproduct of broader risk management myths that cause financial institutions to make costly errors. Here are three key myths to avoid when developing your risk management approach:

5 overlooked risks to watch in financial services

5 overlooked risks to watch in financial services

Yes, we all know cyber security is the top risk facing banks and companies across all industries. However, as financial industry leaders scramble to address cyber risk and security, other banking risk could easily fall under the radar. When assessing business risk in the coming quarter and heading into 2019, keep these sneaky culprits in mind:

NPL buyers should buy with greater focus on re-sale price in mind

NPL buyers should buy with greater focus on re-sale price in mind

In the residential whole loan market, many non-performing loan (NPL) buyers see an opportunity to rehabilitate borrowers, turn the assets into re-performing loans (RPLs) and eventually sell the assets to an investor that specializes in owning RPLs. The strongest buyers of RPLs are generally institutional buyers that oftentimes securitize the assets.

Largest holders of MSRs continue to manage risk effectively

Largest holders of MSRs continue to manage risk effectively

Risk management activities for 14 of the largest holders of residential mortgage servicing rights (MSR) produced an average net gain in asset value of 0.4% during the first quarter of 2018, according to the latest MSR Industry Report produced by MountainView Financial Solutions, a Situs company. The largest gain among the 14 companies was 4.6%, and the largest loss was -3.3%.


Using model risk management to gain strategic advantages

Using model risk management to gain strategic advantages

If you aren’t approaching model risk management correctly, you’re putting your organization in a compromised position, because your models are being underutilized or used blindly in your decision making. An effective approach, on the other hand, gives your organization strategic advantages.

CECL's credit box curveball

CECL's credit box curveball

With the Fed raising rates and long-term rates stabilizing, the yield curve is flattening, leaving financial institutions in a more vulnerable position. To offset the cost of funds and increase profit margins, many banks and credit unions are looking for ways to grab more market share, increase returns and appeal to a wider audience. Some lenders are taking on more risk by expanding credit boxes (appealing to under-served or complex borrowers) and loosening underwriting standards. With the ongoing rush to create and implement CECL models, how would expanding credit boxes impact your credit loss estimates?

A first: re-performing loan deals outpace non-performing loan deals

A first: re-performing loan deals outpace non-performing loan deals

From the third quarter of 2017 through the first quarter of 2018, the volume of re-performing loans (RPLs) traded in the secondary market exceeded the volume of non-performing loans (NPLs) for the first time. Amid these market conditions, RPL pricing has firmed up and in certain instances increased, while NPL pricing has held steady. These are two key findings in the Q1 2018 1st Lien Whole Loan Secondary Market Color report recently released by MountainView Financial Solutions, a Situs company.