Economic capital / Other risks [41]

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Bullet points include: Many organisations are parts of larger organisations (‘groups’) May therefore be exposed to the risk that other parts of the group run into difficulties (with reputational and/or financial consequences) Cash may be sucked out of solvent parts of the group to try to stop other parts going insolvent or firms may receive services from other group companies, which if interrupted may cause problems Group risk mitigated by: Clear intra-group contracts defining who does what A chore in good times, but essential in times of severe stress Ring-fencing of capital (ideally watertight from perspective of subsidiary but not necessarily from perspective of centre)

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