- Prolonged maintenance of low
- Resulting housing price bubble and subsequent bust
- Modified approaches to underwriting and a reduced emphasis on traditional underwriting standards
- High levels of leverage in many areas of the financial system
- Valuation and risk measurement analytics that did not fully keep pace with product complexity
- Questions about risk management effectiveness
This is not the first time the financial services industry has experienced a downturn that could be traced to such issues. What makes this market collapse different is the magnitude of the losses and the number of firms that seemingly did not fully understand their aggregate risk exposures.
We believe it is time to take a fresh look at the risk management capabilities of financial institutions. A change in the way methodologies and processes are executed can help many financial institutions move from a position of vulnerability to a place where risk management is executed more holistically, and the company is not exposed to material unknown risks. Visit Deloitte.com to access the full report, part of the Deloitte Center for Banking Solutions’ Shaping the New Financial Services Marketplace series.