Closing the Cyber Insurance Gap

Over the past few decades the internet has enabled extraordinary innovation to take place, creating new business models, giving rise to world-changing companies and generating millions of jobs.

KPMG in the UK joins insurance market Lloyd’s of London and international law firm DAC Beachcroft to provide a sector-by-sector assessment of the cyber threats facing companies today. The new report also outlines the financial impact of data breaches, and analyzes both the immediate and ‘slow-burn’ costs that could dramatically increase the final bill for businesses and insurers.

Closing the cyber insurance gap, Global Thought Leadership

IT Internal Audit: Multiplying risks amid scarce resources

A look at how IT Internal Audit is responding to the increased pressure to measure the management and mitigation of technology risks.

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Venture Pulse Q2 2017 – Global Analysis of Venture Funding

KPMG Enterprise’s Global Network for Innovative Startups has launched has the Q2’17 edition of the Venture Pulse Report. The report analyses the latest global trends in venture capital investment data and provides insights from both a global and regional perspective. KPMG Enterprise has expanded the scope of our Venture Pulse report, this edition of the quarterly series provides in-depth analysis on the lifecycle of venture capital investments across the Americas, EMA and ASPAC, including a look at investment activity such as valuations, financing, deal sizes, mergers & acquisitions, exits, corporate investment and industry highlights.

Global Analysis of Venture Funding

Navigating through change

The report, themed “Navigating through change”, describes how the regional banking sector is responding to market opportunities and challenges, including those posed by digitalization, changes in the geopolitical climate and regulatory developments.

Covering over 90 percent of the region’s listed banking assets, the report indicates that banks in the region have performed relatively well over the last 12 months, despite margin compression, increased impairment charges and increased funding costs. Whilst overall net profit has declined year-on-year for the first time in recent years, asset growth has remained robust at 6.5 percent on average across the region.

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The world awaits: Basel 4 nears completion

The Basel Committee is expected to finalize early next year its revisions to the standardized and internal ratings based approaches to the calculation of risk weighted assets for credit risk; a shift to a single standardized approach to operational risk; and the application of a capital floor to limit the extent to which regulatory capital requirements calculated using internal model approaches to credit and market risk can diverge from calculations using standardized approaches.

It remains to be seen how far the Basel Committee will amend its earlier consultation proposals to achieve its stated objective that these revised standards should not increase overall capital requirements significantly. Some banks will certainly be subject to a further increase in their regulatory capital requirements.

These revised standards will also largely complete what KPMG has been calling ‘Basel 4’, following the finalization in January 2016 of the Basel Committee’s revised framework for market risk.

In addition to higher regulatory capital requirements, many banks will face significant operational costs in implementing the revised standards, and will need to align their responses to the plethora of other regulatory reforms and commercial pressures they face.

The revised standards from the Basel Committee will put further downward pressure on banks’ profitability and will reinforce the need for some banks to change.

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Brexit: Financial Services

What would happen if the UK did lose its passporting rights and how would that affect banks and businesses outside Europe? Giles Adams, Partner in risk compliance KPMG in the UK, shares the messages coming from the UK’s financial sector and its customers across Europe.

Highlights

  • 78 percent of Europe’s foreign exchange activity and half its fund management takes place in the UK
  • London is an ecosystem that is impossible to replicate: Europe needs the City and the City needs Europe.
  • Asia and US could strengthen position as banking centres at Europe’s expense.

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Stress testing

In the wake of the global financial crisis, increased regulatory focus has necessitated significant efforts by the largest banking institutions to develop and enhance their existing stress testing capabilities. Further, it has intensified the pressure on banks to demonstrate not only financial resilience under adverse conditions, but also the robustness of controls, processes and the overarching governance framework that supports stress testing.

Our recent benchmarking analysis of 19 systemically important banks (SIBs) stress testing practices reveals significant progress has been made in enhancing stress testing frameworks in recent year. However, diverging practices across regulatory exercises, their constant evolution and the structural differences versus internal approaches has made it difficult for banks to achieve high levels of efficiency and effectiveness.

We also identified key learnings for regulators, in particiular, taking a more coordinated and aligned global approach to regulatory stress testing exercises would significantly lessen the burden on banks thereby releasing resources to focus on internal risk management.

Stress testing: A benchmarking analysis of systemically important banks, explores how institutions currently approach and use stress testing within the business, the costs, challenges and future development plans, as well as the relationship between the stress testing process and the value derived from it by the banks and regulators.

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Banks’ strategies and business models

This paper unpacks six myths around regulation and their impact on banks’ strategies and business models.

Responding to regulatory policy and managing supervisory expectations continue to be high on the agenda at many banks. Banks must continue to manage the complex suite of new rules enacted – or still being formulated – by global, regional and national policy setting bodies, while also navigating an uncertain economic and competitive landscape.

This is complicating – and in some cases inhibiting – strategic, business model and operational decisions by banks that need to change their strategies and business models in order to address fundamental issues around profitability, viability and sustainability.

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