Wells Fargo Risk Management Paper - 1418 Words

Wells Fargo Risk Management â€Å"Risk comes from not knowing what you’re doing.†Ã¢â‚¬â€Warren Buffet 2014 Jovan Gonzalez University of Texas at San Antonio 2/11/2014 Wells Fargo Risk Management â€Å"Risk comes from not knowing what you’re doing.†Ã¢â‚¬â€Warren Buffet 2014 Jovan Gonzalez University of Texas at San Antonio 2/11/2014 Overview When it comes to managing key risks that financial institutions face such as, credit risk, asset/liability interest rate and market risks, Wells Fargo Board of Directors (Board) and senior management are ultimately responsible for managing these risks. Along with the help of different committees such as, The Board’s Credit Committee, who manages the annual credit quality plan, lending policies,†¦show more content†¦So managing this risk is important to Wells Fargo because both sides of the balance sheet are sensitive to interest rates. Measure- Wells Fargo uses different risk measures to value the frequency of a loss or gain and the severity of a loss or gain. The first measurement the company uses to assess interest rate risk is a scenario analysis. The company compares â€Å"different outcomes under various earnings simulations using many interest rate scenarios that differ in the direction of interest rate changes, the degree of change over time, the speed and the projected shape of the yield curve.† These scenarios require assumptions regarding how changes in interest rates and related market environments could influence drivers of earnings and balance sheet structure (prepayment speeds, deposit balances and mix). Some other risk measures the company uses specifically for assets/liabilities include net interest income sensitivity (interest earned on loans), interest rate sensitive noninterest income and expense impact. The company likes to refer to the combination of these exposures as interest rate sen sitive earnings. Currently the company is positioned to benefit from higher interest rates, such that net interest income will benefit as their assets re-price faster than their liabilities, and if rates are low, assets will re-price downwardShow MoreRelatedCareer And Company Analysis : Wells Fargo1284 Words   |  6 Pagesmore skills to become a good accountant. This is why I choose Wells Fargo as my company choice. Wells Fargo is an international banking and financial services holding company. Wells Fargo by market capitalization is the largest bank in the United States and by assets the third largest. The founders of Wells Fargo are Henry Wells and William Fargo. The current CEO is John G. Stumpf. Wells Fargo was founded March 18, 1852. Wells Fargo had a goal to provide financial services by the fastest meansRead MoreCase Analysis : Wells Fargo Essay1044 Words   |  5 PagesPaper 2: Who Knew? 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