Banking Risk Management Quotes

Nature likes to overinsure itself. Layers of redundancy are the central risk management property of natural systems. We humans have two kidneys (this may even include accountants), extra spare parts, and extra capacity in many, many things (say, lungs, neural system, arterial apparatus), while human design tends to be spare and inversely redundant, so to speak—we have a historical track record of engaging in debt, which is the opposite of redundancy (fifty thousand in extra cash in the bank or, better, under the mattress, is redundancy; owing the bank an equivalent amount, that is, debt, is the opposite of redundancy). Redundancy is ambiguous because it seems like a waste if nothing unusual happens. Except that something unusual happens—usually.

The more you warn your colleagues about the tail risks—the rare but devastating events that can bring the bank down—the more they roll their eyes, give a yawn and change the subject. This eventually leads to self-censorship. The system filters out the thoughtful and replaces them with the faithful.”11

But the questions not asked screamed out the loudest. Nobody brought up inflated tech valuations or risk management. Nobody seemed concerned about the tenuous economics of ridesharing. SoftBank’s $4.4 billion WeWork deal was the largest slug of capital ever committed to a start-up, but nobody asked what WeWork had to do with technology. Because nobody asks tough questions in a bull market.

We don’t worry about who manages the bank or what they do with our money. Even if we hear on the news that our bank has started to lend large sums of money to piano-playing cats, which we think is a bad idea, we would not feel the need to show up at the bank the next morning to ask for all of our money back. If you had lent your money to an individual and they in turn lent your money to piano-playing cats, you would demand your money back immediately. But because you deposit your money into a bank account insured by the federal government, you feel no need to keep a watchful eye on what your bank does with the money. Insurance removes the incentive for customers to police a bank. It can also remove the incentive for banks to police themselves because they do not bear the full or even the most serious consequences of their actions. Removing the natural tendencies of the market to notice and punish bad choices creates a moral hazard that may result in well-funded cats and other undetected market risks.

Well, my dear fellow,” resumed Banks, “a daring climber like you ought to make some ascent in all this great chain.”   “Never!” exclaimed the captain.   “Why not?”   “I have renounced ascents!”   “Since when?”   “Since the day when, after having risked my life twenty times,” answered Captain Hood, “I managed to reach the summit of Vrigel, in the kingdom of Bhootan. It was said that no human being had ever set foot on the top of that peak! There was glory to be gained! my honour was at stake! Well, after no end of narrow squeaks for it, I got to the top, and what did I see but these words cut on a rock: ‘Durand, dentist, 14, Rue Caumartin, Paris!’ I climb no more!”   The honest captain! I must confess that, while telling us of his discomfiture, Hood looked so comical, that it was impossible to help joining him in a hearty laugh.   I

Oh, it’s perfectly safe to handle if somebody else has triggered the curse and you took it from their still-smoking body.” Eve paused. “Or if they sold it to you.” “You bought it, didn’t you?” Imp walked towards her. “Didn’t you?” “I think so. I may have screwed up that side of things,” Eve admitted. “It’s unclear.” “What’s unclear?” “It was up for auction: obvs, right? But it’s not clear that the person auctioning the location of the manuscript actually owned what they were selling, that’s the thing. Also, ancient death spells and intellectual property law don’t always play nice together. I, uh, my boss has a standard procedure he has me follow in cases of handling blackmail and extortion. We pay the ransom, then once we’ve destroyed the threat I repossess the payment from the blackmailer’s bank account. Via a Transnistrian mafiya underwriter—” This time it was Wendy who interrupted: “The Russian mafiya has underwriters?” “Transnistrian, please, and yes, criminal business models are inherently expensive because they have to pay for their own guard labor—there are no tax overheads, but no police protection for carrying out business, either—so of course they evolved parallel structures for risk management, mostly by embedding the risk in a concrete slab and dumping it in the harbor—anyway. At what stage does the book consider itself to have been legitimately acquired? And by whom? Is it safe for you to handle it, as my employee? What about as an independent freelance contractor not subject to the HMRC IR35 regulations? Am I an acceptable proxy for Bigge Enterprises, a Scottish Limited Liability Partnership domiciled in the Channel Islands, in the view of a particularly dim-witted nineteenth-century death spell attached to a codex bound in human skin by a mad inquisitor? It’s like digital rights management magic, only worse.

The risk models developed by private firms, whether hedge funds, rating agencies, or banks, are not reliable guides to the future. Even when these models are applied by government regulators, their application is flawed, because they look to past market history as received truth. But markets, we must emphasize, are imperfect; they are the agglomeration of myriad investors, most of whom usually act rationally - usually, as history has shown, but not always. Even perfectly logical investors will panic, as will theatergoers at the mere possibility of fire, so as not to be last to the exit; this threat of contagion renders financial markets inherently unstable.

Know Singapore’s Credit Bureau to Get License Money Lender Approval Do you ever wonder how a licensed money lender like banks get the information they need to decide whether they will approve your loan or not? In this article, you’ll know the Credit Bureau Singapore (CBS) role on the moneylenders’ process of lending money. History of CBS Association of Banks in Singapore (ABS) and DBIC Holdings owns CBS. It was founded on November 15, 2002, and its key role is to serve as a financial risk management tool for financial institutions. Among CBS founders’ are Citibank, United Overseas Bank (UOB), Development Bank of Singapore (DBS), Oversea-Chinese Banking Corporation (OCBC), American Express, ANZ, Maybank, HSBC and Standard Chartered Bank. Key Role of CBS on Licensed Money Lender Loan Approval The CBS is a private company established to help financial companies and credit card institutions to evaluate the threats and opportunities of giving credit to possible or current customers. To put simply, when you apply for a loan, the CBS gives the licensed moneylender your credit report. This credit report reflects your credit information such as credit history, repayment track, and in some cases default records, lawsuit, and bankruptcy reports. This valuable information is collected from financial institutions and other public data resources (like subpoena and data of bankruptcy) which is part of CBS. The Banking Act allows the CB to get such customer’s confidential data and produce a “complete risk profile.” CBS follows a stringent code of conduct to protect the consumer’s data privacy. Only the official members of CBS can access and use the credit information. Licensed money lender should not disclose any information about their clients’ credit background to any third party. The CB also cannot collect customer’s personal data such as contact numbers, home address, credit limit, and salary. Now that you finally know who helps licensed money lender to decide your loan’s approval, you should now know that borrowing money is not as simple as it sounds. Multiple agencies are working together to check whether you are worthy of the money.

Know Singapore’s Credit Bureau to Get License Money Lender Approval Do you ever wonder how a licensed money lender like banks get the information they need to decide whether they will approve your loan or not? In this article, you’ll know the Credit Bureau Singapore (CBS) role on the moneylenders’ process of lending money. History of CBS Association of Banks in Singapore (ABS) and DBIC Holdings owns CBS. It was founded on November 15, 2002, and its key role is to serve as a financial risk management tool for financial institutions. Among CBS founders’ are Citibank, United Overseas Bank (UOB), Development Bank of Singapore (DBS), Oversea-Chinese Banking Corporation (OCBC), American Express, ANZ, Maybank, HSBC and Standard Chartered Bank. Key Role of CBS on Licensed Money Lender Loan Approval The CBS is a private company established to help financial companies and credit card institutions to evaluate the threats and opportunities of giving credit to possible or current customers. To put simply, when you apply for a loan, the CBS gives the licensed moneylender your credit report. This credit report reflects your credit information such as credit history, repayment track, and in some cases default records, lawsuit, and bankruptcy reports. This valuable information is collected from financial institutions and other public data resources (like subpoena and data of bankruptcy) which is part of CBS. The Banking Act allows the CB to get such customer’s confidential data and produce a “complete risk profile.” CBS follows a stringent code of conduct to protect the consumer’s data privacy. Only the official members of CBS can access and use the credit information. Licensed money lender should not disclose any information about their clients’ credit background to any third party. The CB also cannot collect customer’s personal data such as contact numbers, home address, credit limit, and salary. Now that you finally know who helps licensed money lender to decide your loan’s approval, you should now know that borrowing money is not as simple as it sounds. Multiple agencies are working together to check whether you are worthy of the money.

Jacek Nowak was struggling to get buy-in from senior management. He was working in an industry, banking, that is known for being reticent to change. And he was trying to get them to do something about customer experience that was in some senses the antithesis of what they were used to. But by lowering the barrier to trial and driving discovery, he helped management experience the value of what he was suggesting and ultimately adopt his suggestions. Chuck Wolfe was competing against one of the largest industries in the world, whose budget dwarfed his by more than a thousandfold. And getting teens to quit smoking was something that dozens of organizations had been trying to do for decades, without much success. But by laying out the truth rather than telling teens what to do, he was able to turn the tide. By letting them be active participants rather than passive bystanders, Chuck made them feel like they were in control. He reduced reactance and got teens to convince themselves. Nick Swinmurn needed a way to help a small start-up get off the ground. Shoesite.com was running out of money and they needed to change consumer behavior—fast. But rather than trying to convince people or spending funds they didn’t have on splashy ads, they removed the roadblocks. They used free shipping (and returns) to let potential customers experience the offering firsthand. By lowering the barrier to trial, Zappos reduced risk, alleviated uncertainty, and built a billion-dollar business. And along the way, helped usher in the world of online shopping we’re all so familiar with today.

Charles T. Munger is fond of saying that there are “more banks than bankers.” A competitive advantage based on a willingness to make loans in an instant would be anathema to old-fashioned bankers. Of particular concern to us is the extent to which Irish bankers engage in the hard-sell to investors. One of them declared at the conference we recently attended: “I am here unashamedly to sell you X bank!” This rather goes against our preference for bankers as cautious individuals, obsessed with long-term downside risks. As we have seen in many other businesses, an obsession with growth, combined with overpromotion, is likely to end in tears. As to when this will happen, we must wait for time, Ireland’s proverbial story teller.

acronym CAMELS stands for Capital adequacy, Asset quality, Management quality, Earnings, Liquidity, and Sensitivity to market risk. Under this system, banks are ranked on a 1 to 5 scale,

Later, as banks began to improve their balance sheets, several attempted to pay back their government loans. The Obama administration refused to accept the money, on the grounds that banks would first have to pass a “stress test.” Of course the “stress test” was simply a way for the government to maintain control of those banks. So if banks gained by getting free money, and the government gained by extending control over the financial sector, who lost? The taxpayer! The taxpayer was the sucker in this whole transaction. His money stood guarantee for the depositors and investors and bank officials who had taken risks and made bad loans and were now facing crippling losses. Instead of them suffering, the taxpayer suffered. And who raided the Treasury and stuck the taxpayer with this bill that was not the taxpayer’s bill to pay? The very federal government that is responsible for managing the Treasury and protecting the revenues provided by the taxpayer.

The most important lesson here is that what is tolerable risk for a company may well be intolerable for a nation. This is particularly true in banking. There is no real economy if the financial economy fails. As elaborated by Posner, “The risk to the nation is not the bankruptcy of a single major bank but the collapse of the banking industry, precipitating a financial crisis that can bring on a depression.” The

relationships between debtors and creditors brokered or ‘intermediated’ by increasingly numerous institutions called banks. The core function of these institutions was now information gathering and risk management.

In the past year, a new divestment campaign has caught on, faster than any other such campaign in history, according to a recent Oxford university study. Investors representing more than $2.5tn in assets under management, including the Rockefeller Brothers Fund, Norway’s giant oil fund and the Church of England (whose archbishop is a former oil executive) have all joined the chorus saying sayonara to their dirtiest fossil fuel investments. They reason this is not about biting the hand that fed them; rather, it is about morality and economics. It is about the morality of not standing on the sidelines of climate change, “the most pressing moral issue in our world” in the words of the lead bishop on the environment for the Church of England. It is also about the economics of not getting stuck holding a bag of stranded fossil fuel assets that cannot be burnt if the world is to adhere to a given carbon budget, a topic on which Mark Carney, governor of the Bank of England, has expressed concerns. And it is about not missing out on the transition from a high-carbon to a low-carbon economy. The president of Harvard University, whose endowment is estimated to have a carbon footprint as big as that of Jamaica, is not convinced. As Drew Faust argues, constraining investment options risks significantly constraining investment returns, while divestment is unlikely to have a financial impact on the affected companies. It also raises the troubling problem of boycotting a whole class of companies whose products and services we rely on.

This was classic regulatory arbitrage. Bank managers were not unaware of the risks they courted. Wall Street has simply never kowtowed to regulations that pull the plug on profitable businesses. They always find their way around them.

Finding Reliable Bookkeeping Services Near You Maintaining accurate financial records is critical for any business, and bookkeeping services play an essential role in ensuring that your financial data is organized and up-to-date. Whether you run a small business or a large enterprise, outsourcing your bookkeeping to a local professional can save you time, reduce errors, and improve overall financial management. If you’re searching for bookkeeping services near you, finding the right provider can significantly impact your business’s financial health. The Benefits of Local Bookkeeping Services Hiring a local bookkeeping service offers several advantages, starting with personalized attention. Local providers are more familiar with regional tax laws and regulations, which can ensure that your business remains compliant. Additionally, face-to-face meetings are much easier to arrange, allowing for more effective communication and tailored services that meet your specific needs. Moreover, working with a nearby bookkeeping service enables quick access to your financial data and faster problem resolution. Should any questions arise, having someone local means you can address them promptly, improving the efficiency of your financial management. What to Look for in a Bookkeeping Service When searching for bookkeeping services near you, consider their experience and expertise. Professional bookkeepers should be well-versed in various accounting software programs, such as QuickBooks or Xero, and should have experience working with businesses in your industry. Additionally, ensure that the bookkeeping service offers a comprehensive range of services, including managing accounts payable and receivable, reconciling bank statements, and preparing financial reports. Reviews and recommendations from other businesses in your area can provide valuable insights into the reliability and trustworthiness of the bookkeeping service you’re considering. Checking for certifications, such as a CPA license, can further validate their credibility. Ongoing Support and Compliance Local bookkeeping services can also help ensure that your business stays compliant with tax regulations. By keeping track of all financial transactions and maintaining accurate records, they make tax preparation seamless. This support helps minimize the risk of errors and penalties during tax season. In conclusion, finding the right bookkeeping service near you can make a significant difference in how efficiently you manage your finances. With personalized attention, local expertise, and ongoing support, a professional bookkeeper ensures that your business’s financial health remains on track.

I grew up close to Bethlehem and the only branch where I could attend church was the BYU Jerusalem Center. Palestinians living in the West Bank are not allowed into Jerusalem, so for years, I had to sneak into Jerusalem, getting shot at sometimes and risking being arrested so I could attend church services. The trip would take three hours and would involve me climbing hills and walls and hiding from soldiers. I felt that each Sabbath I was given the strength and protection I needed to get to church. I remember one Sabbath in particular. I was asked to give a talk in sacrament meeting that week. However, the day before, we had curfew imposed on us by the Israeli soldiers. Curfew in Bethlehem is not something you want to break. It is an all-day long curfew and lasts for weeks sometimes. You are not allowed to leave your house for any reason. Anyone who leaves their house risks getting shot. For some reason, I felt that Heavenly Father wanted me to give that talk, but I wondered how He expected me to get to church! I mean, even if I were to manage to leave my house without getting shot, I did not have a car then. How would I find public transportation to get to Jerusalem? There was no one on the roads except soldiers. I decided to do all that I could. I knelt down and basically told Heavenly Father that all I can do is walk outside. That was the extent of what I could do. He had to do the rest. I did just that. I got dressed in my Sunday clothes, got out of our house and down the few steps out of our porch, and walked on to the road. Amazingly enough, there was a taxi right in front of my house! Now, we live on a small street. We never see taxis pass by our street, even during normal days. I approached the taxi driver and asked him where he was going. Guess where was he going? To Jerusalem, of course. Right where I wanted to go! He had others with him in the taxi, but he had room for one more person. The taxi driver knew exactly which roads had soldiers on them and avoided those roads. Then we eventually got to where there was only one road leading out of town, and that road had soldiers on it. The taxi driver decided to go off the road to avoid the soldiers. He went into a hay field. We drove in hay fields for about half an hour. It was very bumpy, dusty, and rocky. Finally, we found a dirt road. I was so thrilled to not be in a field! However, a few short minutes later, we saw a pile of rocks blocking that dirt road. I thought we would have to turn around and go back. Luckily, the taxi driver had more hope and courage than I did. He went off the dirt road and into an olive tree field. He maneuvered around the olive trees until he got us to the other side of the pile of rocks. I made it to church that day. As I entered the Jerusalem Center I reflected on my journey and thought, “That was impossible!” There was no way I could have made it to church by my efforts alone. The effort I made, just walking outside, was so small compared to the miracle the Lord provided. Brothers and sisters, we give up too easily, especially when something seems impossible or hard. In last week’s devotional, Brother Doug Thompson said that in order to complete our journey, we must avoid the urge to quit. We do this by seeking spiritual nutrients and seeking a celestial life. [5] If we continue trying, we will reach our goal. In your classes, make sure do your best! In your job, do your best! In your callings, in your home and in everything you do, do the best you can. The Lord will sanctify your efforts and make them enough if you approach Him in faith and ask for His power from on high.

Cash and bank deposits are not risk-free investments. They suffer substantial hidden risks like inflation, credit, and foreign exchange.

Buying a bond only for its yield is like getting married only for the sex. If the thing that attracted you in the first place dries up, you’ll find yourself asking, “What else is there?” When the answer is “Nothing,” spouses and bondholders alike end up with broken hearts. On May 9, 2001, WorldCom, Inc. sold the biggest offering of bonds in U.S. corporate history—$11.9 billion worth. Among the eager beavers attracted by the yields of up to 8.3% were the California Public Employees’ Retirement System, one of the world’s largest pension funds; Retirement Systems of Alabama, whose managers later explained that “the higher yields” were “very attractive to us at the time they were purchased”; and the Strong Corporate Bond Fund, whose comanager was so fond of WorldCom’s fat yield that he boasted, “we’re getting paid more than enough extra income for the risk.” 1 But even a 30-second glance at WorldCom’s bond prospectus would have shown that these bonds had nothing to offer but their yield—and everything to lose. In two of the previous five years WorldCom’s pretax income (the company’s profits before it paid its dues to the IRS) fell short of covering its fixed charges (the costs of paying interest to its bondholders) by a stupendous $4.1 billion. WorldCom could cover those bond payments only by borrowing more money from banks. And now, with this mountainous new helping of bonds, WorldCom was fattening its interest costs by another $900 million per year!2 Like Mr. Creosote in Monty Python’s The Meaning of Life, WorldCom was gorging itself to the bursting point. No yield could ever be high enough to compensate an investor for risking that kind of explosion. The WorldCom bonds did produce fat yields of up to 8% for a few months. Then, as Graham would have predicted, the yield suddenly offered no shelter: WorldCom filed bankruptcy in July 2002. WorldCom admitted in August 2002 that it had overstated its earnings by more than $7 billion.3 WorldCom’s bonds defaulted when the company could no longer cover their interest charges; the bonds lost more than 80% of their original value.

There was one company—I think it was eMoneyMail—that shut down the company at a conference basically saying that the Internet is not a safe place to conduct transactions. They had 25 percent fraud. So for every $4.00 changing hands in the system, $1.00 was stolen. And it was all coming out of their pocket. They said, "We lost a ton of money," and they just quit. Then, people like Citibank and other large financial institutions that also competed with us that understood the fraud thing very well—they knew from many years of practice that this was going to become a big problem—didn't really approach it with the same happy abandon that we did. We started with this, "Fraud is going to kill us. What can we do to save ourselves?" They started from, "We have no fraud. How can we build this and not let any more fraud in?" Which is the wrong position to start because you are limiting your users, and new users learning about a new system really don't want to be restricted. Livingston: Why do you think they thought that way? Levchin: I think there's a very strong power of default where, to them, certain behavior to solve a particular problem is well understood. There are people that make careers out of risk management in big banks. They know that what you do is this and you don't do that. The other part, I think, is that a lot of them are public companies. We didn't go public until we had the fraud thing figured out. Somebody like Citibank or anyone with a substantial public visibility announcing that they are suddenly bleeding out $10 million a month in fraud would send serious shocks through the investor base. But I think, even if they did that, it's likely they wouldn't have been successful because—we had talked to a lot of them both as a potential acquirer and as partnership potential—none of them had actually ever gone to the sort of stuff that we did for our anti-fraud work. The default of how you do these things is very powerful, if you've been in the industry for a long time. So we were sort of beneficiaries of our naïveté. We thought, "We don't know how to do this; let's just invent it.

Your investment in a bank account is as secure as your bank is. If your bank goes bankrupt, so does your investment.

By influencing the private and public pronouncements of economists, Beijing shapes global perceptions of China’s economic outlook. When financial risks to the Chinese economy became serious in 2015, the CCP began exerting subtle influence on international banks not to rock the boat with bad news. UBS, the largest Swiss bank, has a long history in China and has been actively pursuing a deeper role in its financial system.103 It too has been pressured to rein in its public commentary, and in 2018 one of its employees was detained in China, for no apparent reason, causing UBS management to bar travel by its staff to China.

Central banks across the globe have been hesitant to recognize bitcoin as a form of money, and Tuesday’s vanishing act isn’t helping. Mt. Gox “reminds us of the downside of decentralized, unregulated currencies,” said Campbell Harvey, a professor at the Duke University Fuqua School of Business who specializes in financial markets and global risk management. “There is no Federal Reserve or IMF to come to the rescue. There is no deposit insurance.” However, Campbell said, Mt. Gox’s disappearance “doesn’t mean the end of the road” for bit-coin and other virtual currencies.

What is a Nidhi Company? Understanding the concept and objectives of Nidhi Companies in India. How Nidhi Companies promote savings and financial support among members. Benefits of Incorporating a Nidhi Company Low-risk and cost-effective financial model. Facilitates lending and borrowing among members at minimal interest rates. Promotes a culture of savings within communities. Legal Requirements and Eligibility Minimum capital and membership requirements for incorporation. Key compliance aspects under the Companies Act, 2013. Incorporation Process Step-by-step guide to registering a Nidhi Company. Documentation and regulatory approvals involved. Challenges and Opportunities Common challenges faced during incorporation and operation. Growth potential and scope for expansion in rural and semi-urban areas. Role in Financial Inclusion How Nidhi Companies contribute to financial empowerment at the grassroots level. Their role in bridging the gap between banking institutions and underserved populations. Engage participants by inviting personal experiences or insights into starting or managing a What is a Nidhi Company? Understanding the concept and objectives of Nidhi Companies in India. How Nidhi Companies promote savings and financial support among members. Benefits of Incorporating a Nidhi Company Low-risk and cost-effective financial model. Facilitates lending and borrowing among members at minimal interest rates. Promotes a culture of savings within communities. Legal Requirements and Eligibility Minimum capital and membership requirements for incorporation. Key compliance aspects under the Companies Act, 2013. Incorporation Process Step-by-step guide to registering a Nidhi Company. Documentation and regulatory approvals involved. Challenges and Opportunities Common challenges faced during incorporation and operation. Growth potential and scope for expansion in rural and semi-urban areas. Role in Financial Inclusion How Nidhi Companies contribute to financial empowerment at the grassroots level. Their role in bridging the gap between banking institutions and underserved populations. Engage participants by inviting personal experiences or insights into starting or managing a Nidhi Company..

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