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The extreme uncertainty of the global economy requires a new risk management framework. This session will examine the rapidly changing risks to the global economy and the need for new ways of behaving, making decisions and even reversing decisions.
[vc_quotes layout=”accordion” quotes=”%5B%7B%22name%22%3A%22Lakshmi%20Shyam-Sunder%22%2C%22job_role%22%3A%22Vice%20president%20and%20chief%20risk%20officer%2C%20World%20Bank%20Group%20(United%20States)%22%2C%22content%22%3A%22Lakshmi%20Shyam-Sunder%20was%20appointed%20vice%20president%20and%20World%20Bank%20Group%20chief%20risk%20officer%20in%20February%202014.%20She%20was%20previously%20chief%20financial%20officer%20and%20director%2C%20finance%20and%20risk%20at%20the%20Multilateral%20Investment%20Guarantee%20Agency%20(MIGA)%2C%20the%20political%20risk%20insurance%20and%20credit%20enhancement%20arm%20of%20the%20World%20Bank%20Group.%20Shyam-Sunder%20was%20one%20of%20the%20key%20contributors%20to%20the%20MIGA%2FIBRD%20Exposure%20Exchange%20Agreement%20within%20the%20Bank%20Group%2C%20and%20was%20responsible%20for%20strengthening%20and%20enhancing%20the%20finance%2C%20risk%2C%20resource%20management%2C%20IT%2C%20and%20control%20functions%20in%20MIGA.%20Prior%20to%20joining%20MIGA%20in%20March%202011%2C%20she%20worked%20at%20the%20International%20Finance%20Corporation%20(IFC)%2C%20also%20part%20of%20the%20World%20Bank%20Group%2C%20where%20she%20held%20a%20variety%20of%20positions.%20As%20director%20for%20corporate%20risk%2C%20she%20led%20the%20development%20of%20a%20new%20client%20risk%20management%20advisory%20service%20function%20for%20IFC%20clients%20and%20the%20creation%20of%20the%20International%20Financial%20Institutions%20Risk%20Data%20Consortium.%20Before%20that%20Shyam-Sunder%20was%20director%20of%20IFC%E2%80%99s%20risk%20management%20and%20financial%20policy%20department%20where%20she%20developed%20IFC%E2%80%99s%20integrated%20economic%20capital%20and%20pricing%20framework%2C%20and%20had%20responsibility%20for%20all%20financial%20risks%20arising%20from%20the%20corporation%E2%80%99s%20loan%20and%20equity%20investments%20in%20emerging%20markets%2C%20and%20Treasury%20activities%20as%20well%20as%20managing%20rating-agency%20issues.%20She%20was%20also%20co-chair%20of%20IFC%E2%80%99s%20new%20products%20assessment%20group.%20Shyam-Sunder%20has%20consulted%20for%20a%20wide%20range%20of%20public%20and%20private%20sector%20institutions%20in%20the%20US%20and%20in%20emerging%20markets.%20She%20has%20also%20served%20on%20the%20board%2C%20and%20finance%20and%20risk%20committees%20of%20institutions%20in%20emerging%20markets.%20Before%20joining%20IFC%2C%20Shyam-Sunder%20was%20a%20faculty%20member%20at%20the%20MIT%20Sloan%20School%20of%20Management%20where%20she%20received%20an%20award%20for%20Excellence%20in%20Teaching.%20Shyam-Sunder%20was%20also%20on%20the%20faculty%20of%20The%20Tuck%20School%20of%20Business%20Administration%20at%20Dartmouth%20College.%20She%20holds%20a%20Ph.D.%20in%20Finance%20from%20the%20MIT%20Sloan%20School%20of%20Management%20and%20an%20MBA%20from%20the%20Indian%20Institute%20of%20Management%2C%20Ahmedabad.%20%20Shyam-Sunder%20was%20born%20in%20Iraq%2C%20and%20grew%20up%20in%20India.%20She%20is%20married%20and%20has%20one%20daughter.%22%2C%22image%22%3A%2231887%22%2C%22linkedin%22%3A%22https%3A%2F%2Fwww.linkedin.com%2Fin%2Flakshmi-shyam-sunder-7b24a03%2F%22%7D%5D” title=”Speaker” el_class=””][vc_quotes layout=”accordion” quotes=”%5B%7B%22name%22%3A%22Amanda%20White%22%2C%22job_role%22%3A%22Director%20of%20institutional%20content%2C%20Conexus%20Financial%20(Australia)%22%2C%22content%22%3A%22Amanda%20White%20is%20responsible%20for%20the%20content%20across%20all%20Conexus%20Financial%E2%80%99s%20institutional%20media%20and%20events.%20In%20addition%20to%20being%20the%20editor%20of%20Top1000funds.com%2C%20she%20is%20responsible%20for%20directing%20the%20global%20bi-annual%20Fiduciary%20Investors%20Symposium%20which%20challenges%20global%20investors%20on%20investment%20best%20practice%20and%20aims%20to%20place%20the%20responsibilities%20of%20investors%20in%20wider%20societal%2C%20and%20political%20contexts.%20She%20holds%20a%20Bachelor%20of%20Economics%20and%20a%20Masters%20of%20Art%20in%20Journalism%20and%20has%20been%20an%20investment%20journalist%20for%20more%20than%2025%20years.%20She%20is%20currently%20a%20fellow%20in%20the%20Finance%20Leaders%20Fellowship%20at%20the%20Aspen%20Institute.%20The%20two-year%20program%20seeks%20to%20develop%20the%20next%20generation%20of%20responsible%2C%20community-spirited%20leaders%20in%20the%20global%20finance%20industry.%22%2C%22image%22%3A%2231872%22%2C%22linkedin%22%3A%22https%3A%2F%2Fwww.linkedin.com%2Fin%2Famanda-white-101a7515%2F%3ForiginalSubdomain%3Dau%22%7D%5D” title=”Moderator” el_class=””][vc_empty_space height=”10px”]
Key takeaways
We need to think far more broadly beyond simply financial risk, our view of risk must not be one dimensional. The crisis helps us learn and get better at modelling interconnected risks. Bigger, broader risks are interconnected and require increased collaboration to mitigate. Even if we are sitting on the fence and maintaining investment positions, risk has gone up.
The pandemic has turned our lives not inside out, but ‘outside in’. Rather than shut down, we should ask ourselves ‘what can we do to help the situation?’
We are in the deepest recession since World War 2, and it is completely synchronised across the world. If a vaccine is not available, the World Bank forecasts the global economy will shrink by 8 per cent.
The pandemic has set The World Bank back in its aim to help alleviate poverty – 170 million people will remain in poverty due to the pandemic with an income of below $2 per day.
The challenging environment is exacerbated by intergenerational and geopolitical tensions. Key question is how to exit from the pandemic stimulus measures.
Green bonds for example are a heartening development from the financial community.
Institutional investors are considering more non-financial risks and are engaging more deeply with investee companies. If we do this right it will mitigate, not exacerbate the issue.
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Poll results
Have you changed your attitude to risk taking because of the recent onset of unforeseeable risks including this current health pandemic?[vc_line_chart x_values=”” values=”%5B%7B%22title%22%3A%22Yes%2C%20we%20have%20taken%20risk%20off%20the%20table%20in%20our%20portfolio%20allocations%20(21%25)%22%2C%22y_values%22%3A%2221%22%2C%22color%22%3A%22pink%22%7D%2C%7B%22title%22%3A%22No%2C%20about%20the%20same%20(58%25)%22%2C%22y_values%22%3A%2258%22%2C%22color%22%3A%22sandy-brown%22%7D%2C%7B%22title%22%3A%22Yes%2C%20we%20are%20taking%20more%20risk%20as%20we%20see%20opportunities%20in%20the%20disruption%20(21%25)%22%2C%22y_values%22%3A%2221%22%2C%22color%22%3A%22sky%22%2C%22custom_color%22%3A%22%23ff9900%22%7D%5D” css=”.vc_custom_1593673826068{border-radius: 2px !important;}”]
The Florida State Board of Administration has made some strategic moves to take advantage of opportunities in the dislocation, including in private equity, distressed debt and active listed equities.. But CIO, Ash Williams, is concerned about the underlying real economy.
The Responsible Asset Allocator Initiative finds that 25 leading public pension and sovereign wealth funds, with assets of $6 trillion, are investing tens of billions of dollars in COVID-19 solutions and in funds to support stricken companies. Here they look at what the leading asset allocators around the world are doing to respond to the pandemic.
Global economic activities will not be back to pre-COVID levels until 2022 according to CPP Investments’ outlook, with the giant Canadian investor expecting the situation to get worse before it gets better.
The coronavirus pandemic sparked a surge of volatility across global financial markets. In this paper, MSCI looks at five key lessons for investors from the crisis, including that managing factors was more critical than picking stocks.
New research looking at the impact of COVID-19 under different scenarios – from opening of economies to no vaccine – suggests the economic consequences of COVID-19 under all scenarios is substantial and the ongoing economic adjustment is far from over.
Meticulous planning for the next market crash, and an eye on liquidity, meant IMCO was well positioned to invest, particularly in credit, when the opportunity arose. The fund continues to use its agility to its advantage and is now looking for opportunities in private markets.
It is critical to analyse how much COVID-19 could impact the US economy and stock markets but most of the traditional factors or economic indicators will lag the market movement. Therefore, alternative datasets other than the financial data show their explanation power to provide insights into the pandemic. This article, by academics at Tsinghua University, University of Illinois and Carnegie Mellon University, looks at the pattern of the market fluctuation from the perspective of alternative data.
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