Extension risk and Geopolitical risk: Difference between pages

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Extension risk is a form of liquidity risk and interest rate risk for a financial institution.
1. ''Risk management''.


It arises from the later than expected repayment by customers of, for example, residential mortgages.
Any political tension occurring in a country - or between two or more countries - which could lead to riots, secession or wars, to the point where it affects the physical security of an organisation's counterparties or personnel, or the permanent disruption of the movement of goods or services.


Geopolitical risk overlaps with political risk.


The consequence is an extension of the maturity of the mortgage asset, and an increase in the amount and maturity of funding needed to fund the asset for its longer remaining life.


:<span style="color:#4B0082">'''''Treasury's geopolitical concerns'''''</span>
:"There's been much to concern the treasury professional worldwide over the past few years.
:The aftermath of the financial crisis, the constant drumbeat of regulation and all manner of geopolitical surprises are just a handful of the core concerns."
:''The Treasurer magazine, August 2018, p11 - Peter Matza, speakers chair, Association of Corporate Treasurers.''
2.
More broadly, the risks discussed above, together with the risk of omissions or other inaction resulting from failures of global political or other transnational efforts.
For example, climate change inaction.




== See also ==
== See also ==
* [[Interest rate risk]]
* [[Climate risk]]
* [[Mortgage]]
* [[Event risk]]
* [[Pipeline risk]]
* [[Geopolitics]]
* [[Prepayment risk]]
* [[Global Financial Crisis]]
* [[RMBS]]
* [[Investment risk]]
* [[NATO]]
* [[Offshore]]
* [[Political risk]]
* [[Regulation]]
* [[Security]]
* [[World Economic Forum]]
 
 
== Other ACT resources==
*[https://www.treasurers.org/hub/technical/russia-ukraine Russia-Ukraine crisis - resources for treasurers]


[[Category:Identify_and_assess_risks]]
[[Category:Financial_risk_management]]

Latest revision as of 15:25, 3 April 2023

1. Risk management.

Any political tension occurring in a country - or between two or more countries - which could lead to riots, secession or wars, to the point where it affects the physical security of an organisation's counterparties or personnel, or the permanent disruption of the movement of goods or services.

Geopolitical risk overlaps with political risk.


Treasury's geopolitical concerns
"There's been much to concern the treasury professional worldwide over the past few years.
The aftermath of the financial crisis, the constant drumbeat of regulation and all manner of geopolitical surprises are just a handful of the core concerns."
The Treasurer magazine, August 2018, p11 - Peter Matza, speakers chair, Association of Corporate Treasurers.


2.

More broadly, the risks discussed above, together with the risk of omissions or other inaction resulting from failures of global political or other transnational efforts.

For example, climate change inaction.


See also


Other ACT resources