Managing higher risk portfolio concentrations – Debt to Income in focus

In its November 2021 Information Paper on the Macroprudential Policy Framework, APRA highlights its expectation that ADIs are appropriately pre-positioned to be able to control growth and the composition of lending, if needed. In this Rhizome Risk Insight Article, we explore what you need to consider in managing high debt to income (DTI) portfolios.

Inside the risk management failures at Credit Suisse

Credit Suisse’s report provides important insights about how risk management practices failed and how the identified weaknesses are being remediated.

Boards and executives should use the report to reflect and challenge themselves about the way risks are being managed in their own organisations – going deeper than surface-level observations to understand what’s really happening in practice.

Commercial real estate lending emerging from the pandemic – maximising opportunity and managing risks

There is considerable uncertainty about the financial position of small businesses which have been hardest hit by the pandemic and the flow-on impacts for income producing property. Additionally, the pandemic has accelerated changes in the structural demand for office and retail space.

Lenders with rich data and sophisticated portfolio management practices will be better positioned to navigate through this period of uncertainty – able to quickly identify opportunities to strategically adjust underwriting standards, policies and portfolio allocations with the requisite clarity and confidence. 

Culture, conduct and the Kabuki Theatre

Why does it take Royal Commissions, media reports, shareholder activism and litigation before boards and senior leaders recognise that issues of culture, and the behaviours it may engender, represent material risks to business outcomes?

The three lines of defence – when reality is different to theory

Most financial institutions have adopted the three lines of defence risk management system. History has shown that it has not prevented the occurrence of risk failures since its emergence.  In theory, it sounds like a relatively simple concept – in practice, it has been difficult to implement and embed. 

Effective oversight of non-financial risk

On 2 October 2019, ASIC released the first report from its corporate governance taskforce: ‘Director and officer oversight of non‑financial risk. The depth of the report is a strong indicator of the level of scrutiny this category of risk will continue to receive from regulators in the coming years.

Peak debt for households and businesses

As the pandemic rages, households and businesses will be reaching peak debt and beyond in the foreseeable future.