Risk Insights

From the inception of financial engineering, it took the industry decades to integrate value-at-risk (VaR), Greeks, and copulas into its standard business practice. Artificial intelligence is currently in such an introductory phase. Acknowledging this parallel can be challenging, as it subverts the conventional idea of risk management. The Sandbox Problem Shake a sandbox repeatedly, and certain light objects rise to the top.

The April 7 introduction of Claude Mythos was no ordinary software release.

Institutional investors, banks and insurers rely on physical climate risk data to understand how changing climate conditions will affect the assets underlying their portfolios. The problem is that physical climate risk data vendors, when evaluating the exact same asset, frequently reach different conclusions about which hazards pose the greatest risk, how severe those risks are, and sometimes whether meaningful risk exists at all.

For decades, Enterprise Risk Management (ERM) operated under the rule of law with a stable domestic sovereign and a judiciary that operated as a predictable referee. While geopolitical risk frameworks carefully mapped the predatory behaviors of foreign regimes, domestic stability was assumed. Today, that assumption is dead.

To reconstruct a swap spread trade and assess its risk, a regulator would simultaneously need to see the cash Treasury position, the repurchase agreement (repo) financing, and the interest rate swap. No regulator today sees all three. Vanderbilt Law School professor and associate dean Yesha Yadav made that point to the U.S. House Financial Services Committee Task Force on Monetary Policy, Treasury Market Resilience, and Economic Prosperity.

Birthdays — and specifically 100th birthdays — have been a strong theme across the media recently, with an outpouring of affection and admiration as the U.K.’s greatest naturalist, Sir David Attenborough, celebrated his centenary.

As artificial intelligence takes the business and financial world by storm, agentic AI is causing a tsunami in its own right. The market for the autonomous technology is already bigger than $9 billion, with analysts expecting well into hundreds of billions by 2034. In day-to-day terms, the prospects are incredibly exciting or fraught with risks – or both – and disrupting strategies and processes in real time.

Geopolitical risks and policy uncertainty have risen markedly since the mid‑2010s, particularly in the last few years. Conflicts in Ukraine and Iran and global trade wars have reinforced a reality that many risk professionals already understand: The effects of geopolitical shocks can spread quickly across borders, markets and balance sheets. For financial services firms, geopolitical risks are not new.

On successive days this spring, crypto-asset platforms Gemini Space Station and Payward proclaimed themselves “full stack” derivatives firms, having obtained the requisite array of Commodity Futures Trading Commission licenses. Gemini’s climactic regulated-market designation, as a Derivatives Clearing Organization (DCO), was announced April 30. A day later, Payward, the parent of Kraken, filled out its stack by acquiring CFTC-licensed Bitnomial.

In late 2025, a breach notification letter arrived from an outsourcing company the recipient had never engaged, about data it had never knowingly shared with the sender. The notice came from Conduent, which processes data on behalf of health insurers across 46 states. The intrusion had gone undetected for nearly three months and taken 11 months to generate a notification.