Question

Global crisis such as the 2008 global financial crisis and the COVID19 pandemic expose financial institutions to significant risks. The institutions risk exposures may be muddled by regulatory changes aimed at containing such crisis. Discuss the implications of the CONVID19 pandemic on the broader risk exposures of financial institutions. Analyse the effects of global regulatory changes on the level of risk assumed by banks. Propose measures to help banks deal with risks stemming from the COVID19 pandemic. The proposals should aim at ensuring a sound and stable banking sector during and after the crisis.

Answer 1

A continue spread of the pandemic and its aftermath will significantly slow down business,hence financial institution must take additional measures to ensure business continuity to continue to remain relevant to their customers.Banks and financial institutions must prepare for scenarios that might occur post the lockdown period as well.This would be essential in developing a flexible contigency plan that best equips the bank for crisis management and provides supportive solutions to its customer.The current challanges are likely to translate into high capital infusion requirements for the financial institution to maintain both regulatory capital as well as growth capital.

Institutions that takes sensitive measures to ensure customer and employees reliefs,will be able to truly differenciate and eventually grow and sustain themselves.In summary,times will be tough but by adopting a vigilant short,medium and long term action plan,financial services players will emerge from this crisis as stronger,confident and socially responsible institutions.

Institutions which use the downturn to sharpen their businesss models are likely to gain more from the impetus which the government stimulus is likely to provide.