Co-Founder and CEO of ActiveViam Weighs in on First Republic

Kathy Perrotte, CEO and Co-Founder of ActiveViam comments on the banking industry:

"The Fed rightly assumes some responsibility for some of the issues that led up to the collapse of SVB. These recent events have exposed flaws in the current regulatory framework, and some of the Fed’s policies. Often, banks focus on meeting regulatory requirements or market best practices but do not always fully consider their own unique risks and vulnerabilities. It’s time banks are empowered to think in a more tailored way, rather than how to satisfy a general policy made by regulators. The SVB crisis and subsequent contagion, such as we are seeing with First Republic, is a perfect example of this issue in action.

“For banks, prudent risk management requires risk teams to possess sufficient imagination to guard against different — and sometimes inevitable — scenarios. To the Fed’s point, bank runs, such as the one that took down First Republic Bank, are now accelerated by social media. Advanced technology is a double-edged sword. It can accelerate contagion, but specific technologies can also save you from a whole world of risk management pain. It has become very clear that the industry needs more collaboration between regulators and banks to understand the full landscape of potential risks.”