The Orbit36-Training “Archegos collapse – Lessons for Risk Management” provides a profound review of the shortcomings in risk management revealed by the collapse of Archegos Capital Management in March 2021. The training is designed for senior managers, board members, regulators, auditors and risk management experts in the financial services industry.

Participants learn how major Wall Street Banks lost billions on their counterparty exposures to a single client, why the loss potential of the derivatives transactions was heavily underestimated and what needs to be done to avoid similar blowups in the future.

The training discusses the complex deal structures which allowed Archegos to establish a risky and allegedly fraudulent trading scheme. In one case, a twenty-billion dollar exposure was unaware to the firm’s senior management and board of directors. The training shows how this could happen and why the exposures were low-balled by deficiencies in the calculation methods for Counterparty Credit Risk (CCR) RWA. Stress tests provide in general a suitable tool to identify the loss potential of concentrated exposures but were in the case of Credit Suisse rendered ineffective by the bank’s legal entity booking model.