Question

The COVID19 pandemic has created uncertainty for businesses around the world and has exposed financial institutions to significant global risks. With appropriate illustrations discuss the potential effect of the pandemic on the performance and risk exposures of the various sectors of the financial system globally. Propose an appropriate COVID19 mitigation strategy for a bank with a significant global presence. Show how your proposal could help the bank manage banking sector risks instigated by the pandemic.

Answer 1

Mitigation strategy for coronavirus in case of bank having a significant global presence would be as follows-

A. Lesser exposure in in those assets who are more prone to interest rate risk.

B.significant hedging of various translation risk because there would be wild swings in currencies rates.

C. Recoveries of all such loans who are suspectible in nature.

D. Asset reconstruction company is to be approached to sell out all those loans who are highly doubtful.

E.exposure in mostly into those currency who are most strong in nature like United State dollars as primary currency so that currency fluctuations can be efficiently deal with.