When we talk about unforeseen Black Swan events, the COVID-19 virus fits the profile. It has come out of nowhere, taken lives, disrupted public health, altered our daily lives, causing financial market volatility, caused more than five standard deviations of movement in interest rates and likely to have a material impact on credit markets. This isn’t business as usual and for this uncharted territory, you might find this playbook helpful.
Unfortunately, the “triumvirate of hurricanes” – Houston, Florida and Puerto Rico have given banks a modern data set in which to model a widespread disaster scenario for their residential first trust deed credit portfolio.
While there are not too many good things about Hurricane Harvey and Irma, one silver lining is that the disasters have opened our eyes to how banks can be more valuable to their customers. In retrospect, we should have done a better job at helping our customers prepare and be doing a better job post-disaster to help both retail and commercial customers manage their claims.
