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Risk Managers Should Brush Up on Central Bank Kremlinology 

February 13, 2015

Mayra Rodriguez, American Banker

It's only the beginning of 2015, and portfolio managers around the globe are already confronting country risk in ways they barely had to consider last year. When portfolio managers typically think about country risk, they think about a sovereign's ability and willingness to pay its debt, along with the country's political stability, threat of expropriation and exchange controls. But country risk also encompasses central bank policies and actions.

I realized that 2015 will be the year of central bank Kremlinology as I talked with fellow panelists and conference participants at a recent Trade Tech Foreign Exchange conference in Miami. Corporate risk managers, especially those at financial institutions, will need to decipher how unforeseen central bank monetary policies and actions could impact their earnings and capital. This is a good time for risk managers to reevaluate their capital models to see if they really can withstand unexpected losses.

Read More: American Banker

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