Rethinking risk frameworks and stress testing in volatile markets

Market volatility and disruption have put more pressure on risk teams to stay close to exposures, reporting, and client understanding. How have CROs and risk leaders been navigating this challenge? Saadia Mujeeb, Group Head of Financial Risk Management & Control at Nordea, shares observations from the industry.

Volatility can trigger margin calls and create liquidity pressures. Coupled with non-financial risks such as operational risk from higher trading volumes and cash movements, along with cyber and AI-related threats, the jeopardy of navigating this risk landscape is mounting.

As a result, CROs are recalibrating risk frameworks by reassessing covenants, updating market risk models for gap risk and non-linear moves, reducing reliance on manual processes, and accelerating legacy system improvements. Saadia also highlights integrated stress testing that includes geopolitical factors, cyber supply chain, and third-party impacts, and anticipates uneven growth, sticky inflation, higher rates, and combined credit-liquidity stresses driving the need for forward-looking resilience planning.

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