Newsletter
FIRM | ISSUE 4 | 2024
It is a special highlight every two years when we award our FIRM Research Prize. Three young researchers present their dissertations and take part in the discussion in the large plenary session. Who wins the race in the end is always exciting. This year it was Dr. Sasan Mansouri, who completed his doctorate at Goethe University and was supervised by Prof. Mark Wahrenburg.
All the exciting topics relating to the FIRM research conference are summarized in the current newsletter. These included the presentation on quantum risk, which probably opened the eyes of many to the potential dangers that the use of super-fast computers poses for the financial industry. Things are also getting uncomfortable on another front, as our focus on ESG shows: If you compare the climate policies of the EU and the US, it becomes obvious that the EU likes to regulate and the US likes to act. This costs the EU important points in global competition, as the position paper presented by the ESG Round Table shows. Investments are made where progress is made. And it must if we want to achieve the global climate targets – in the EU as well as in the USA.
FIRM | Ausgabe 3 | 2024
Förderung von Forschung und Lehre – für diesen Zweck wurde FIRM 2009 gegründet. Und diese Aufgabe ist bis heute die tragende Säule unseres Netzwerks. Die Vergabe von Forschungsgeldern und die Auslobung unseres Forschungspreises ist das, was wir bei unseren Forschungskonferenzen nach außen tragen. So auch in diesem Jahr, wenn wir am 20. Juni 2024 die Arbeiten der talentiertesten NachwuchsforscherInnen würdigen und neue Projekte an etablierte Forschungsteams vergeben.
Doch das Engagement von FIRM ist viel umfassender. So vergeben wir nicht nur Stipendien an die Studierenden von Frankfurt School und Goethe Business School. Wir suchen auch regelmäßig den direkten Austausch mit den Nachwuchskräften im Risikomanagement: bei Kaminabenden und Infoveranstaltungen, im direkten Gespräch mit den StipendiatInnen.
Mehr zu unseren Aktivitäten in Forschung und Lehre sowie ein Ausblick auf unser Positionspapier ESG – ein Vergleich der Ansätze in der EU und den USA sowie Berichte aus unseren Round Tables finden Sie im aktuellen Newsletter.
FIRM | Issue 2 | 2024
Last week was the general meeting of FIRM. A club meeting can be a pretty boring affair. Finally, all formalities and resolutions stipulated in the Articles of Association must be completed.
But we thought: let’s make it as tight as possible. After all, everything runs smoothly at FIRM. We only took time for one highlight, the election of the new members of the FIRM Board. We are delighted to have Stefanie Buchmann, Andreas C. Heise and Marco Kreuter as three committed members of our team.
We used the resulting free space for exciting content: FIRM CEO Gerold Grasshoff analyzed how geopolitical risks affect the banking industry. Jens Wilhelm from PeakBlau took a deep dive into the complex risks currently lurking in the real estate market. The advisory board meeting dealt with the question of how personal communication works in receivables management. Prof. Christine Laudenbach from the SAFE Institute and Dr. Marcus Siegl from Intrum were guests at the event. We have summarized all the presentations for you in this newsletter.
Plus reports from our round tables on artificial intelligence, cyber risks and ESG, the outlook for the Research Award 2024 and a podcast recommendation on the energy transition with Dr. Stefan Peiß.
FIRM | Issue 1 | 2024
Where will the journey take us in 2024? Uncertain. But what we do know: The path is lined with risks. From well-known issues such as the renewed increase in credit risk. And of completely new ones. These include, above all, geopolitical risks, which will top the rankings for supervisors, banks and investors in 2024. This is reflected in FIRM’s risk map and also shapes the discussions in the Executive Board, in the round tables and at our events.
In addition to profitability and growth, risk management is becoming the third pillar of success for companies, as Gerold Grasshoff also says in the interviews he conducted at the beginning of the year. The high level of methodological expertise that has been built up in risk management over the past few years helps here. However, it is crucial to focus on the greatest risks.
These are geopolitics, cyber risks, reputational risks and ESG risks. In this newsletter, you can find out how this focus translates into the work of FIRM and what the focus of the Round Tables 2024 will be. You can also read the reports on the FIRM Advisory Board meeting with the guest lecture by Prof. Katharina Hombach. There are updates on the ongoing research projects of Prof. Christine Laudenbach and Prof. Peter Gomber as well as a specialist article on the topic of climate stress.
FIRM | Issue 8 | 2023
What topics will shape risk management in 2024? FIRM CEO Gerold Grasshoff addresses this question in the latest newsletter. In addition, a review by the Advisory Board Chairwoman, an overview of the FIRM Round Tables and a specialist article on the topic of “Financial sustainability”.
Whitepaper
ESG – Climate risks
How the climate and energy policies of the EU and the USA affect the economy
The current position paper of the FIRM Round Table ESG examines the climate policy measures of the European Union (EU) and the United States (US) in terms of their impact on economic performance.
The authors Dr. Til Bünder and Nicholas Martin explain how the significantly more ambitious regulations in the EU will affect various economic levels, where opportunities will arise and what risks need to be considered. A comparison of the EU and US climate and energy policies shows that the US is becoming more attractive due to its direct and simple approach to promoting green investments. The EU, on the other hand, is jeopardizing its leading position in the field of green innovation and investment due to its more complex regulation and the fragmentation of financing mechanisms. It is therefore crucial that the EU continues to develop its political framework conditions in such a way that climate targets are achieved and its economic competitiveness is secured at the same time.
Asset Management
Navigating the Future: DLT and Digital Assets
in the Evolving Realm of Asset Management
Emerging technologies such as digital ledger technology (DLT) are revolutionizing numerous industries, including the asset management sector. This white paper analyzes the latest advances in the application of these technologies in asset management and provides an outlook on the digital transformation in the coming years.
The wealth management industry is increasingly using digital assets and DLT to diversify its offering and improve operational efficiency. Institutional interest in digital assets in particular is on the rise, putting them in the spotlight for various investment strategies. The commitment of industry giants such as Goldman Sachs and BlackRock underlines the importance of this trend.
This white paper examines the integration of DLT into asset management, describing the benefits as well as the potential risks. Recommendations for a successful introduction are also given. It shows how DLT can rationalize processes, reduce costs and create transparency within asset management processes, in research, trade processing and risk management.
The paper addresses key areas such as tokenization, trade settlement, risk management and the possibilities of decentralized finance (DeFi). A case study by Bankhaus Metzler on the issue and trading of native crypto fund shares under German law will also be shown. The authors provide an outlook on the impact of the integration of DLT and digital assets on the asset management industry.
Authors: Dr. Christoph Wronka, Jens Hermann Paulsen, Lars Ulbricht (all Deloitte) as well as Hendrik König and Shahrok Shedari (both Bankhaus Metzler)
Payments
Risk management and operational
resilience in payment transactions
The importance of electronic payments has increased rapidly in recent years. The reasons for this are technological innovations, advancing digitalization and modernization of the market infrastructure. For banks, the processing of account and card payment transactions therefore represents a core value chain and an important business segment.
The position paper highlights the challenges that banks currently face in payment traffic. To this end, the Round Table conducted a survey among FIRM member institutions, surveyed the status quo, and developed important internal and external recommendations for action.
Authors: Dr. Markus Ampenberger (BCG), Prof. Dr. Tobias Berg (Goethe University), Daniel Regending (Deutsche Bank)
Macroeconomics
Bracing for Impact: Analysis of the
Current
State of the Banking Industry
Uncertainty remains high following the recent bank failures of Silicon Valley Bank, Signature Bank and Credit Suisse. Is there a danger of a renewed crisis? The risk should not be underestimated, write the authors of the current FIRM position paper. According to their assessment, however, the banks are better prepared than in the financial crisis of 2007/2008.
FIRM CEO Gerold Grasshoff, together with co-author Dr. Til Bünder (BCG), has spent the last few months intensively studying the developments on the
Banking market busy. “You have to go way back to understand the context in which current developments are taking place,” Grasshoff explains. The banking sector has been fed with cheap money over the past 15 years, through low interest rates over a very long period and through quantitative easing.
Authors: Gerold Grasshoff (FIRM) and Dr. Til Bünder (BCG)
Asset Management
Cryptoassets
Crypto assets have had a difficult year. After hitting record highs in November 2021 and a market capitalization of $3 trillion, the end of quantitative easing also marked the end of the highs in the crypto market. The collapse of the crypto exchange FTX provided another low point. Many of the events in recent months are reminiscent of the dotcom bubble at the beginning of the millennium. This makes it all the more important to take a close look at the opportunities and risks of this asset class.
In past meetings, the Asset Management Round Table has taken a closer look at the various facets of the crypto market. The discussion panels showed that both asset management practitioners and experts from business and academia continue to see huge potential in blockchain technology. However, it is expected that the crypto world will undergo drastic changes
– both at the regulatory and monetary level.
Authors: Christoph Wronka, Jens Paulsen and Nils-Philipp Böhm (all Deloitte)
Professional Articles
IRO and ESRS – control through risk governance
IRO stands for Impacts, Risks and Opportunities.
This triad is the central basis of the European Sustainability Reporting Standards (ESRS).
In order to be able to report on the success of their sustainability activities, companies must have implemented a process for identifying, measuring and managing their impacts, opportunities and risks.
This triad also forms the basis of the materiality analysis and enables a comprehensive view of a company’s sustainability activities and the associated consequences.
Effective risk governance plays a central role here, as it links the IRO triad required for external reporting with internal corporate management.
The end of classical portfolio theory
The current article deals with the question of whether the assumptions, the mechanisms inherent in the model and the conclusions to be drawn from them stand up to scrutiny in view of the latest developments on the financial markets.
Author: Dr. Jochen Felsenheimer, Managing Director of XAIA Investment GmbH
Financial sustainability, ESG and value investing
The current specialist article deals with the study “Financial sustainability, ESG and value investing”. It examines how the consideration of financial sustainability in stock selection affects the performance of common investment strategies such as ESG and value investing.
Authors: FIRM editorial team
Sustainable corporate orientation in the context of risk governance
The concept of success, which used to be one-dimensional and focused only on economic performance, has changed to a three-dimensional concept of success that also reflects ecological and social success (triple bottom line).
Authors: Prof. Dr. Arnd Wiedemann and Yanik Bröhl
The Difference-of-Differences Approach: An Application Example in Risk Management
This article highlights the difference-in-differences approach as one way in which econometric techniques can be used to estimate the credit risk of financial institutions.
Authors: Dr. Guido Golla and Dr. Alexander Mosthaf
Yearbooks
Yearbook 2024
In the FIRM Yearbook 2024, we address the current focal points in risk management. More than 50 authors have contributed to the yearbook. They write about cyber risks, cryptocurrencies, artificial intelligence and machine learning, reputation, ESG and governance as well as many other financial and non-financial risk topics. We also report on the work of our Risk Round Tables and present the most recently published position papers.
Yearbook 2023
In the FIRM Yearbook 2023, we show how the dialog between business and science succeeds in practice. With contributions from 50 authors on ESG, payments, cyber risk, artificial intelligence and much more. In addition, reports and position papers from our FIRM Risk Round Tables.
Yearbook 2022
In the FIRM Yearbook 2022, more than 50 authors from business and academia explain in their contributions and studies on ESG risks and taxonomy, cyber risks, consequences of the Corona pandemic, nonfinancial risks, and payments and artificial intelligence in banks, which developments are currently shaping risk management.
Yearbook 2021
