Archegos Collapse Raises Red Flags About Risk Management Systems—and Underscores Need for Investment in Technology
One would think that the global financial calamity experienced in 2008 would have been enough to get banks to deal with any weaknesses in their risk protocols and systems. Seems we were wrong.
The industry got another huge wake-up call in early 2021, and that is the multi-billion-dollar fiasco resulting from the collapse of the U.S.-based hedge fund firm Archegos Capital Management. For some of the prime brokers that suffered losses from their dealings with Archegos, the root cause was a major failure of counterparty risk management and a lack of proper risk oversight.
In this article, the Numerix Risk Team reveals how the Archegos debacle exposed cracks in banks’ risk systems. Explore key insights including:
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