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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.
This paper argues that the COVID-19 pandemic is an inevitable result of globalisation and that the pandemic, in turn, has seriously threatened the world’s globalisation, but adverse effects on globalisation will be temporary.
Although governments everywhere are scrambling to contain the economic fallout from COVID-19, some are approaching the task more strategically than others. The European Union and China, in particular, are focusing on long-term investments in clean energy, whereas America is doubling down on the past.
While some degree of deglobalisation may be desirable today, this process also carries grave risks, from skyrocketing production costs to geopolitical conflict. The only way to mitigate those risks is through enhanced multilateral cooperation.
China's decision to demolish the "one country, two systems" arrangement in Hong Kong appears to be a fait accompli, and in fact seems to have been preordained. Viewed in a broader context, the move represents a major salvo in a new cold war that is already playing out across three critical dimensions.
There is a lack of understanding in investment decision-making about how big the climate crisis is which could lead to investments and risks being mis-directed, according to Professor Cameron Hepburn, Professor of Environmental Economics at Oxford University.
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