We are living unprecedented times. Today, countries across the world are taking steps to ease lockdown measures that have almost brought economies to a grinding halt. Many businesses have been forced to reduce operations or shut down, and an increasing number of people are losing their jobs. Companies in the service industry, a major source of growth in many economies, were among the hardest hit by the coronavirus pandemic. Manufacturers have also been hit, and world trade volume could plummet this year.
This unexpected crisis raises questions about the effectiveness and agility of banking models and existing risk management frameworks.
Risk and business functions, as well as key decision makers, need to steer their organisations through uncharted waters.
Over the years, we have developed a deep and extensive experience in Risk Management, Front Office and modelling, aware of the growing importance of the role of digital transformation as successful facilitator.
We have the size and capability to address all risk issues and deliver end-to-end solutions and consultancy, both in the short term, addressing COVID-19 challenges, and in long run for a true and deep digital transformation.
The health crisis could become the opportunity for financial institutions to fully embrace digitalisation, even though many banks are putting tech investments on the back burner as they focus on cutting costs. Speeding up this technological transition now, will not only help lenders meet a growing demands for digital banking services in the short term but will also create enormous value for financial institutions in a challenging environment.
Adopting a structured approach can help guide institutions through this process, helping them access the opportunities that disruption can bring while keeping the transformation firmly grounded.
We highly recommend that banks identify some key initiatives that can deliver material returns in 12 to 18 months. Short-term gains will help fund a deeper transformation in the long term by freeing up capital and releasing resources needed for more strategic, high-impact priorities. In doing that, risk and treasury leaders should focus on competitive advantage and value creation. In our experience, banks that concentrate upfront on a maximum of two or three use cases get the best results.
Digitalisation should not be limited to market risk, as banks are subject to credit risk
The pandemic has significantly affected financial markets, and market risk is one of the hardest-hit areas
Banks are experiencing liquidity risk management issues as deferred loan repayments, bridge financing needs, etc.
Assistance with the application of COVID-19 stress scenarios and simulations of creditworthiness with our deep credit risk analytical expertise in credit ratings and stress test modelling.
Assistance in carrying out ad-hoc sensitivity analyses in order to translate the dynamic development of the economic outlook into credit risk-relevant indicators (i.e. PD, LGD, ECL).
Experienced credit professionals with know-how in the internal credit rating process to ensure the timely execution of re-ratings.
IFRS 9 impact assessments and scenario analysis to understand the impact on Stage 2 migrations and the impact on IFRS 9 scenario adjustments.
Operational support for your restructuring and workout units to relieve processing pressure and / or operational support for your front lines to relieve pressure on credit applications or credit monitoring.
Setting up a credit risk management COVID-19 task force:
Avantage Reply is a pan-European Financials Services management consultancy delivering change initiatives in the areas of Risk, Compliance, Finance and Operations. Avantage Reply has operations in Amsterdam, Brussels, Frankfurt, Lisbon, London, Luxembourg, Milan, Munich, Paris, Rome and Turin. Avantage Reply adapts to the particular needs of its clients. Our consultants advise and deliver pragmatic solutions, supported by comprehensively tested analytical techniques using proprietary solutions, methodologies and prototypes. Being part of the Reply Group, Avantage Reply can, when relevant, leverage on the group’s technology competences deliver the change initiatives. More details at