Command Strategy on BFM Business in the #JMLECO program presented by Nicolas Doze.
Hakim AMEZIANI, Managing Director of Command Strategy, was Nicolas Doze’s guest on the #JMLECO program on BFM Business.
The topic of the 02/22 issue was: Finance & the impact of Covid 19 – Command Strategy Advisory’s expertise and support for players in the financial sector.
Please find below the transcript of the exchange, taken from the BFM-Business website and written by their partner SCRIBEO. You can watch the replay here.
Impacted by the current crisis, banks and insurance companies are preparing for the future in a changing environment which, in addition to the financial crisis, is marked by the digitization of processes, new regulatory requirements, and the ever-increasing importance of ESG criteria. Hakim Ameziani, Managing Director of Command Strategy, a consulting firm specializing in the financial sector, explains.
What impact has the pandemic had on Risk Management in the banking and insurance sectors?
The pandemic has had a systemic impact on all financial institutions. From a risk perspective, the crisis has had an impact on all financial risks. Market risk, for example, was reflected in a significant fall in the fair value of assets on the trading book in the banking sector, and in the value of assets included in technical reserves in the insurance sector.
Credit risk has been impacted in two ways: firstly, by the reduction in customer loans and the tightening of lending conditions; and secondly, by the inclusion of government support measures in the estimate of credit losses under IFRS 9, notably in the inclusion of macro-economic factors in the estimate of losses, without however creating significant volatility.
More generally, we have observed an impact on our customers’ financial statements and financial communications, with longer lead times and greater flexibility in the distribution of regulatory reports such as COREP and FINREP.
At a time when we’re hoping for a way out of the crisis with vaccination, how can we help financial institutions prepare for the post-Covid era?
At Command Strategy, some of our customers ask us to help them draw up concrete scenarios, in line with the progressive decontamination plan. Indeed, the various departments must contribute to the definition of the disaster recovery plan:
– Establish recovery scenarios in line with deconfinement scenarios, and anticipate possible reconfinement scenarios
– Identify disaster recovery risks, define priorities, their costs and the disaster recovery schedule, then assign teams to priority activities, which requires organizational agility, and support teams in disaster recovery.
Generally speaking, our customers are aware that solving problems now requires the mobilization of their entire teams. It’s no longer just team leaders or top managers who are concerned. It also means providing all employees with digital tools, which are now essential, not only from a strategic point of view, but also on a day-to-day basis to make users’ jobs easier.
Social and responsible investment (SRI) is becoming increasingly popular. How does your company view this trend, and what impact does it have on you?
This is indeed an important issue. Command Strategy’s various BUs are working together to meet this challenge. A few months ago, we worked with an asset management company to select and compare market solutions based on extra-financial data, in order to develop a scoring system for ESG (environmental, social and governance) criteria.
The difficulty is that the extra-financial data we are looking for is more or less available and complicated to apprehend…
Institutional investors are exposed to an unprecedented volume of information, due to the emergence of numerous ESG data providers in recent years. To support them in their decision-making, our data analysts and data scientists have adapted their approaches and algorithms to these new issues, to offer indicators that are ever more in tune with our customers’ needs.
The second topic concerns the integration of this information into investment policies. For a number of years now, we have been supporting Finance Departments in the implementation of their objectives, whether in terms of returns (Asset Managers) or risk management (Asset & Liability Managers & Financial Risk Managers). The success of such a project depends on tailor-made support for the various teams, so that extra-financial criteria are incorporated into their day-to-day work in the same way as other risk indicators.
The final challenge concerns the internal and external communication of this green data. Circulation” is a major problem faced by financial institutions: how to disseminate specialized information through a variety of reports, while maintaining its readability and coherence with an already comprehensive range of existing information (management, regulatory, risk management dashboards, etc.).
At Command Strategy, we work to ensure that each financial institution can address these issues according to its own priorities and identity, while taking into account current and future regulatory requirements.
