We know that many people view the LIBOR transition as another version of the Y2K problem. Some may wonder why our policy risk measurement toolkit can be useful if the main activity is just replacing one pricing benchmark with another one. Today's infographic, prepared for Wednesday's webinar (register HERE), helps answer that question.
The LIBOR transition is NOT Y2K. In fact, it provides a perfect case study for how quantified public policy risk can facilitate enhanced risk management for one simple reason: the new benchmarks are not yet completed.
Financial firms and their corporate customers (not to mention many mortgage holders) are being asked to transition to new market-based standards before the architecture and data history exist for the new benchmarks.
This means that every function regarding the LIBOR transition is directly impacted by public policy decisions that will be made mostly by central banks....during a pandemic. Firms must thus urgently enhance their public policy monitoring mechanisms so that they can make adjustments nimbly as policymakers finalize different elements of the new benchmarks.
How challenging is the monitoring process? Consider the "conversation" I had over the weekend in a LinkedIn group. Some of us were sharing major new developments. One person shared a document from the United States under the mistaken belief that the development was new....in fact, the development occurred on July 1. When the mistake was pointed out, the individual observed that he had relied on a major global law firm for the guidance and alert.
Join us on Wednesday at 10 am ET/1500 GMT to see how this next-generation technology can help you manage and measure your LIBOR transition risks.
BCMstrategy, Inc. is an early stage technology company bringing the data revolution to policy intelligence by quantifying global public policy activity daily. The PolicyScope Platform is available to professional investors, strategists and advocates on a subscription basis.
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