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Student Collaborations

MSRM Students See a More Resilient Future for Brazil
By Anna Christensen

MSRM Brazil Group

“Brazil has experienced many ups and downs in its economic history,” noted Rodrigo Figueroa, a student in NYU Stern’s MS in Risk Management program. “Our team wanted to examine the data rigorously to determine the country’s resiliency to shocks.” A key component of the MSRM program is the strategic capstone project. Students tie together the substantive content and practical case work taught throughout the year in a concrete risk analysis presented at the culmination of the program. Rodrigo was a member of a capstone team seeking to determine Brazil’s capacity to service its external debt in the event of changes in the global economic environment. He worked with teammates Caio Banti, Angelica Sakurada, Enrico Sanches, Ignacio Saralegui, and Daniel Vieira, all of whom have ties to Brazil.

Brazil has defaulted five times in its history, twice in the 20th century. The country appeared to be on an upward trajectory during a period of debt-fueled economic growth in the 1970s but suffered a severe financial crisis after the second oil shock in 1979, leading to the country’s most recent default, in 1983, and a “lost decade” of hyperinflation and successive crises. The students wanted to determine if the country was destined for a similar fate again or if the economic trajectory was more stable this time.

“We were able to pull a great deal of data from the IMF, World Bank, and Central Bank of Brazil to use in our risk analysis,” reported Ignacio. The team also drew from Stern’s resources. “Our project mentor and advisor, Professor Thomas Pugel, challenged us to get the right data and identify key risk indicators, and Professor Ingo Walter taught a framework in his class that was exactly what we needed to structure our project,” recalled Rodrigo. “Once we had our data, we used a scenario analysis technique to test how Brazil would fare in a wide variety of economic situations.”

The students’ comprehensive research indicated that Brazil is “significantly more resilient” than in the past, and therefore equipped to sustain sizeable external shocks without falling back into default within the next five years. Rodrigo noted, “We wanted to have something useful and tangible for anyone with investments or interest in investments in Brazil.” So far, the students have seen initial interest in the report from several parties. Daniel said, “We recently spoke to the CEO of a global risk management services firm, and he was very interested in our report because he gets these specific questions from investors.”

According to Ignacio, “The capstone project’s greatest value is that it allowed us to apply what we learned in class to something that was functional in the real world.” Another aspect of the project that was particularly rewarding for the team was the optimistic analysis: “As a Brazilian, I was delighted to reach a positive conclusion with so much certainty,” said Daniel. Angelica added: “Most of us in the group grew up in a time that was very tough economically in Brazil. It’s great that we can see through our analysis how much more resilient the external accounts are doing now.”

Additional Student Capstone Profiles

Could Stress Testing Transparency Avoid the “Next Black Swan”?

Could Stress Testing Transparency Avoid the “Next Black Swan”? And, given the cost, is it worth it?


One question on the forefront of every Financial Risk Manager's mind is: What will the next crisis be, and how can I help inoculate my firm against this risk?

To avoid such catastrophic events as have been seen in the recent past, regulators globally are both mandating banks to increase the rigor in their stress and also assuming the responsibility of defining the stress testing processes including continual communications, limitations, design and disclosing results directly to the larger public. The intent of such disclosure is to harmonize internal stress testing approaches, encourage banking practices accountability, reduce systemic risk and resolve system-wide market failures.

But do these stress testing disclosure measures lead to any stronger risk mitigation?

Venetia Woo, Wilfrid Xoual, Bharat Chelluboina, Jos Heuvelman and Vincent Lucanie, global risk executives from the Class of 2013 evaluated this question in their capstone project - a group project that works as a practical application of the curriculum taught throughout the year and presented at the culmination of the program.

Over the year-long project, the team conducted both a qualitative and quantitative analysis including in-depth literature review, interviews with regulators, analyst and senior executives from banks and an extensive analysis on the market returns related to the disclosures results. In conjunction with their research, “Input from our classmates, professors and Capstone advisers proved to be an extremely valuable resource to the success of our project,” Vincent shares.

Ultimately, their research illustrated that transparency in stress testing leads to improvements in systemic risk and measurable effects of market discipline. Their Capstone culminated with recommendations to regulators in defining the stress testing and disclosure standards, industry analysts in how to intake and evaluate the disclosure results and financial institutions on how to improve their internal risk frameworks. Wilfrid Xoual shares his insights on the capstone results. “The financial crisis made clear that Tax Payers could not be seen as the solution of last resort for failing financial institutions anymore. Our project, although in a very limited way, showed that it could be beneficial to provide a better visibility on risks taken by banks, and therefore allow for an earlier and cheaper solution shaping in case of problems, potentially protecting all us from the “Too big to fail” syndrome.”

The team's experience with the capstone project and overall program has impacted them both professionally and personally. Bharat shares "The MSRM program couldn't have been at a better time for me. It provided me with valuable resources and understanding which helped me effectively implement some key regulatory programs at RBS.”

Currently, their findings are in the process of academic publications and have been a source of reference in their everyday executive roles. Furthermore, the global risk community and advantages as Stern alumni continue to benefit students much further than the program. Vincent Lucanie shares, “As a Managing Director in a risk area, I have used both my academic and global classmate network in the day-to-day execution of my responsibilities. When a systemic risk issue arises, it has been invaluable network for me to reach out to bring these unique perspectives back to the workplace. The MSRM program is a perfect example of the type of training senior managers need to ensure their business is meeting this objective while remaining profit focused but not just profit centered.” Also, Venetia Woo notes, “The Capstone project is immensely relevant, several fellow alumni have contacted me on CCAR and stress testing as new regulatory requirements emerge for their institutions.”

Published Student Capstone Projects

Future Regulation of Hedge Funds—A Systemic Risk Perspective

MSRM Class of 2010 students Wouter Van Eechoud, Wybe Hamersma, Arnd Sieling, David Young

Van Eechoud, W., Hamersma, W., Sieling, A. and Young, D. (2010), Future Regulation of Hedge Funds—A Systemic Risk Perspective. Financial Markets, Institutions & Instruments, 19: 269-353. doi: 10.1111/j.1468-0416.2010.00160.x

Read the publication here.

Qualitative and Quantitative Risk Management in Emerging Markets

MSRM Students Class of 2011, Konstantin Makarov and Raymond Mui

Read QQRM: Qualitative and Quantitative Risk Management in Emerging Markets here.

Strategic Mortgage Default in Financial Institutions: A Proposal for an Alternative Management

MSRM Students Class of 2012, Jonathan Franco, Melodie Anne Juson, Diederick Koolmees, Cynthia Liwanag, Jeffrey Cherry

Read the entire paper here.