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Practice paper

Managing bank risk through the crisis perspective from Malaysia

Jeroen Thijs and David Bobker
Journal of Risk Management in Financial Institutions, 14 (1), 33-39 (2020)
https://doi.org/10.69554/WSWY5477

Abstract

This paper considers the practical implications of the COVID-19 crisis for risk management in a bank in Malaysia and goes on to draw more general conclusions. It is suggested that standard strategic and credit risk-management practices will need to be taken to the next level in order for banks to better prepare for 2021. Recommendations have been given for improving stress testing and credit risk assessment so as to provide enhanced information on the basis of which difficult decisions can be made. In particular, it is suggested that greater use of reverse stress testing will be beneficial. This use should be coupled with more sophisticated relationships between macroeconomic scenarios and potential credit losses, which will give the bank management a much improved control over uncertainties in the macroeconomy. It is also suggested that banks apply a similar, more formalised (stress testing) approach to credit risk assessment of their larger customers so that a realistic assessment of their repayment ability can be made. Finally, some hard thinking about the future shape of banking needs to be carried out and positions taken in terms of technology, staffing levels, office space and product offerings.

Keywords: COVID-19; crisis; stress test; reverse stress test; resilience; V-shape

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Author's Biography

Jeroen Thijs is currently Group Chief Risk Officer (CRO) at AmBank Group overseeing all credit, market, operational and technology risks. In his 29 years of banking experience (of which the past 10 years were in Malaysia), he has worked across Asia and Europe in risk management, corporate and structured finance and treasury functions. Recent positions include CRO OCBC Malaysia, CRO Bank Islam and various positions at ABN AMRO Bank across various geographies. Jeroen holds an Economics Masters from the Erasmus University Rotterdam.

David Bobker is Associate Professor of Risk Management at the Malaysia University of Science and Technology. He is a UK Chartered Accountant and GARP Financial Risk Manager. He has previously worked as a senior manager at a Big 4 firm, head of internal audit at two major UK financial institutions and a supervisor of building societies. For the last 20 years, he has been a freelance risk-management consultant and risk trainer at senior management and board levels. David holds a DPhil in mathematics from Oxford University.

Citation

Thijs, Jeroen and Bobker, David (2020, December 1). Managing bank risk through the crisis perspective from Malaysia. In the Journal of Risk Management in Financial Institutions, Volume 14, Issue 1. https://doi.org/10.69554/WSWY5477.

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cover image, Journal of Risk Management in Financial Institutions
Journal of Risk Management in Financial Institutions
Volume 14 / Issue 1
© Henry Stewart
Publications LLP

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