The unexpected Collapse of the Silicon Valley Bank highlighted an urgent need for effective risk management within financial institutions. SVB's failure to embrace real-time data reporting and modern management processes regrettably left them exposed; however, improved process visibility and analytics can ensure similar occurrences are prevented in the future.
The property development industry is no stranger to risk. Market turbulence, financial instability and ever-evolving regulatory landscapes are an everyday reality that investors and developers need to be prepared for - but with modern solutions such as fu3e., it's easier than ever to manage risks proactively to maintain security over investments.
But how did this happen for SVB?
Although SVB's venture capital funding skyrocketed, growing from 2019 to early 2022 from $60 billion (USD) to a staggering $198 billion (USD), it needed to manage its asset and liability structure effectively. To mitigate this issue, the bank invested in short-term securities with liquidity preservation as the primary focus while striving for yields through long-term held security investments.
Also, in the background, amazingly, SVB had decided not to replace a Chief Risk Officer in 2022. You would imagine, given the exposure. SVB would have had a process to manage the internal and external risks associated with the daily business. But there is no evidence of this for at least 10 months of that year (2022). This was not the first time SVB had indicated a dim attitude to Risk when they asked for a rollback of the regulator burden in 2015.
How do we learn from this?
In light of the SVB collapse, property funds and developers must recognise the importance of embracing innovative technology solutions to manage Risk and protect their investments effectively. We can also provide crucial components and best practices when delivering risk management frameworks.
Simplistically we implemented the 5 criteria components to risk management. They include risk identification; risk measurement and assessment; risk mitigation; risk reporting and monitoring; and risk governance.
How can fu3e., help in the mitigation of risk and market volatility today?
Here at fu3e. we are fully committed to offering a comprehensive view of development projects and portfolios in the built ecosystem. Our cutting-edge software platform provides robust risk assessment and management features designed to provide early warnings on potential risks associated with property development projects.
With sophisticated algorithms and analytics capabilities, fu3e. can analyse trends, financing conditions, construction progress, asset performance and regulatory compliance to help property funds and developers avoid potential issues and mitigate risks before they escalate.
In addition to its risk, project and portfolio management features, coupled with operational tools, fu3e. supports Environmental, Social, and Governance (ESG) integration. These features empower property funds and developers to manage their investments more effectively, optimise returns and demonstrate their commitment to responsible development. All in Real Time.
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