â¢ Forum hosted By GARP and FRSGlobal
â¢ Back to basics is the call as a response to the current crisis in UAE
Regional experts from the global financial risk management industry have cited that the first response to the crisis should be back to basics. At the chapter meeting titled âRecent Lessons in Risk Management,â held in Dubai on March 17, 2010, the discussion ranged from why, what, how of the current crisis to ways, methods, and response to it.
The forum was organized by the Global Association for Risk Professionals (GARP) and FRSGlobal, a Belgium-based provider of enterprise-wide risk management solutions. This chapter meeting was attended by over 50 financial and technological risk experts from UAE and moderated by Horst Simon and Dr. Sunil Kumar, both co-regional directors for GARP Dubai.
Feroz Noorani, Al Hilal Bank, who brings in several years of risk management experience from Middle East, cited overheated real estate market, excessive speculative stock market, liquidity mismatch, and lack of alternative asset class as one of the main reasons for the huge impact of the crisis in the region. âDecoupling is a myth, the reality is systemic riskâ said Feroz in response to a question regarding the shielding of the local market.
Roy Barnes from FRSGlobal believes that partial insolvency and delayed insolvency provides a false sense of security to the institutions thus making them more vulnerable. âThe Risk Silos is a history,â says Roy, emphasizing the importance of integrated risk management as the way ahead for the banks. Funding diversification, overarching systems and control and pricing liquidity risk correctly are some of the suggestions from Roy to manage the crisis at institution level.
Tanveer Bhatti, CRO Private Banking, Emirates NBD, pointed out that risk transparency in transactions with clients is of paramount importance. âUnderstanding the risks and pricing of structured products is the key to effective risk management,â opined Tanveer, adding âit is vital that risk managers regularly ask questions and be intellectually honest if they do not understand something â otherwise the Board will not get value for moneyâ. He also said âthe recent market crisis put valuation higher up the agenda and underscored the importance of strong communication between Risk and Finance functionsâ. Tanveer has considerable experience in market and counterparty risk management in London and New York and is also a Chartered Accountant.