The Central Risk Book: Managing Risk in a Risk Averse World
One of the most significant changes in banking today is the development of the central risk book. The central risk book is a facility for banks to aggregate trading risks across trading desks, and in some cases across siloed businesses, in an attempt to aggregate risk across the enterprise. It allows the bank to better understand its market, credit and liquidity risks, as well as capital use, funding and hedging. But as banks implement central risk facilities, the hedging and management of the book throws off trades and/or the ability for clients to trade size more efficiently.
The TABB report, “The Central Risk Book: Managing Risk in a Risk Averse World,” analyzes the history, development and deployment of bank-based central risk books. It also discusses how the buy side perceives the development of CRB platforms, which banks provide the most significant platforms, and how the buy side is engaging with this infrastructure.