The views and opinions expressed in this article are those of the thought leader as an individual, and are not attributed to CeFPro or any particular organization.
By Atanas Dimov, Head of Credit Risk & Real Asset Investment Risk, Aviva Investors
What impact does economy disruption have on risk profiles?
Inevitably, risk profiles for many companies are linked to economic performance; therefore, economic disruption would always be a factor in today’s world. From limiting top line downside, through managing costs and personnel, to adapting technology and supporting home working (in the more extreme but necessitated by recent pandemic developments for example), management would always have to cast more effort and increase focus during downturns.
In the more specific case, Financial Institutions are closely linked to economic developments. That being said, stricter regulation and directed risk management post the 2008-09 financial crisis have resulted in stronger banks’ balance sheets, ensuring greater stability. In fact, benefitting from robust capital ratios, some players have actually found opportunities to increase revenues and earnings through the ongoing pandemic disruption (e.g. investment banks).
