The industry got another huge wake-up call in early 2021, and that is the multi-billion-dollar fiasco resulting from the collapse of the U.S.-based hedge fund firm Archegos Capital Management. For some of the prime brokers that suffered losses from their dealings with Archegos, the root cause was a major failure of counterparty risk management and a lack of proper risk oversight.
In this white paper, the Numerix Risk Team reveals how the Archegos debacle exposed cracks in banks’ risk systems. Explore key insights including:
- How bank losses were, overall, the result of a failure to invest in risk technology.
- The fact that XVA capabilities were not appropriately engaged to assess and remediate the risks related to Archegos.
- Significant data quality issues impeded the ability to timely assess counterparty and portfolio credit risk.
- How an ideal counterparty risk management system should work.
- Why having the right risk management capabilities in place can make a huge difference in knowing what to do and when.
