GARP.org article by Peter Hughes
Environmental and Climate Change Risk: Did We Learn the Lessons of the Past?
When global economic meltdown appeared the most likely outcome of the global financial crisis of 2007-08, catastrophe was averted through the combined interventions of governments and banking sector regulators. In his latest article published by GARP Peter revisits the last great crisis and asks if there are any lessons that will help us through the next one brought about by climate change.
What has AMA been replaced with?
The AMA is being replaced with a non-model, standardized capital calculation method that uses risk proxies in place of risk measurement.
The effect is to coerce banks into holding eye-watering levels of inert, unproductive, and costly capital reserves to act as a buffer against extreme unexpected losses, irrespective of the quality of banks’ risk mitigation activities and processes.