152. Institutions’ analysis of risk factors should take into account, but should not be limited to …

Institutions’ analysis of risk factors should take into account, but should not be limited to:

a) the impact of macroeconomic conditions, e.g. the impact of interest rate shocks on contingent cash flows;
b) the currency of assets and liabilities including off-balance-sheet items, to reflect convertibility risk and possible disruptions in the access to foreign exchange markets;
c) the location of liquidity needs and available funds, intragroup liquidity transactions and the risk of constraints for the transfer of funds between jurisdictions or group entities;
d) actions that the institution may take to preserve its reputation or franchise (e.g. the early repayment of callable liabilities);
e) the internalisation of risks related to specific activities, as in the case of prime brokerage where symmetry, to a certain extent, might be required between the lending side and the borrowing side of securities, i.e. customer long positions are funded using the proceeds from customer short trades. Such symmetry is subject to counterparties’ behaviour and is therefore sensitive to reputational risk. In the event of such risk, it may trigger the unwinding of trades that would unexpectedly leave the institution with securities on its balance sheet, along with the need to fund them;
f) the vulnerabilities within the funding term structure due to external, internal or contractual events;
g) realistic run-off rates under normal conditions that accelerate in stressed times;
h) concentration in funding; and
i) estimates of future balance-sheet growth.

1. Forbhreathnú

Teideal	Rialáil

Ceanglais
Foinse	Ceanglas

Caighdeáin
Foinse	Ceanglas