{"id":52124,"date":"2026-02-24T10:00:00","date_gmt":"2026-02-24T09:00:00","guid":{"rendered":"https:\/\/frankfurt-main-finance.com\/?p=52124"},"modified":"2026-02-24T10:31:37","modified_gmt":"2026-02-24T09:31:37","slug":"the-perceived-sense-of-insecurity-is-higher-than-ever-before","status":"publish","type":"post","link":"https:\/\/frankfurt-main-finance.com\/en\/the-perceived-sense-of-insecurity-is-higher-than-ever-before\/","title":{"rendered":"“The perceived sense of insecurity is higher than ever before”"},"content":{"rendered":"\t\t
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Institutions in the financial sector are facing a growing number of risks. In particular, they need to prepare for the America-First policy of the U.S. administration, which has many different facets, says risk manager Gerold Grasshoff from the Frankfurt Institute for Risk Management and Regulation (FIRM).<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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The America-First policy of the U.S. administration is increasingly concerning risk managers in the financial industry. \u201cAmerica First has broad, deep, and probably long-lasting effects,\u201d says Gerold Grasshoff, Chairman of the Frankfurt Institute for Risk Management and Regulation (FIRM), a network of risk managers from the financial industry, regulatory authorities, and academia.<\/p>

In his view, the phenomenon is usually discussed in an overly narrow way. Analyzing Trump\u2019s tariff policy \u2014 which too often dominates the discussion \u2014 is not sufficient. Rather, a broad range of policy approaches lies behind it: \u201cAmerica First means active and opportunistic tariff policy, strategic industrial policy, expansionary fiscal policy, deprioritized climate policy, more restrictive migration policy, and transactional security policy. Financial institutions must position themselves strategically in response.\u201d They should therefore prepare for the tougher stance from Washington and increasingly take its consequences into account in their business activities and risk management.<\/p>

According to Grasshoff, too little attention is being paid to U.S. fiscal policy. He joined the Boston Consulting Group (BCG) in 1997 and serves there in Frankfurt as Managing Director and Senior Partner. The risks of the approach \u2014 based on tax cuts and protectionism aimed at promoting domestic production \u2014 are obvious: \u201cThe monetary stimulus can undermine confidence in U.S. government bonds and increases inflation risks as well as the possibility of a sovereign debt crisis.\u201d<\/p>

As Grasshoff points out, expansionary fiscal policy is also widespread in Europe, albeit not ideologically charged as in the U.S. Although, according to the Maastricht criteria, the debt level of an EU member state may not exceed 60% of gross domestic product, the average in the European Union stands at 82% (as of the end of March 2025). In Germany, it is 62%. The range extends from 24% in Bulgaria and Estonia to 138% in Italy and 153% in Greece.<\/p>

Grasshoff questions how resilient public finances are in the face of high debt levels if inflation and interest rates rise again. Banks must deal with this issue, since many institutions hold government bonds of their home countries. This interrelationship, known as the sovereign-bank nexus, could potentially exacerbate crises.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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Here to stay<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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Grasshoff offers little hope that Germany and Europe can expect a more accommodating trade policy in the event of a change of government in the United States. \u201cWe must assume that the U.S. trade policy, which has been bilaterally oriented under the Trump administration, will remain in place and will not change even under a subsequent administration,\u201d he says.<\/p>

And as if the risks arising from the America-First policy were not enough, Europe must, according to him, prepare for further challenges: \u201cBased on everything we know, the U.S. will not tighten regulation but will likely deregulate \u2014 meaning Basel IV will probably not be implemented,\u201d Grasshoff expects. For Europe, this means focusing on effective regulation. \u201cIt must be examined how financial stability can be ensured with fewer and simpler rules, while at the same time supporting growth and innovation \u2014 in other words, competitiveness,\u201d the risk manager warns.<\/p>

According to Grasshoff, Europeans must focus their attention on competitiveness. After all, it creates the preconditions for strengthening their own capabilities in defense and security policy as well as in industrial and technological leadership. Both are indispensable in order to remain a sovereign actor in global politics during geopolitically tense times like these.<\/p>

There is therefore no shortage of macroeconomic, technological, and geopolitical challenges \u2014 compounded by the rapid pace of change, often driven by the volatile policies of the U.S. president. \u201cFrom a risk manager\u2019s perspective, perceived uncertainty is currently higher than ever before,\u201d is Grasshoff\u2019s conclusion. He and FIRM identify geopolitics, technological change \u2014 particularly artificial intelligence \u2014 and the competitiveness of national economies as the biggest current risk drivers.<\/p>

AI amplifies traditional risks. For this reason, Grasshoff emphasizes the importance of strong governance: \u201cIf it is not clear who is responsible for AI models, how they are implemented and applied, tested and documented, then there is a problem.\u201d Without clear rules, it becomes impossible to control the models and to understand and trace decisions.<\/p>

\u201cBanks cannot operate AI models that produce result A today and result B tomorrow,\u201d says the risk manager. For this reason, applications are currently largely limited to support functions \u2014 analyzing large volumes of data and extracting information from documents. This mainly concerns information and communication technology in areas such as coding, research, and sales support. Humans remain involved at all times.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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Welcomes new stress test<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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Grasshoff has a favorable view of the new concept behind this year\u2019s ECB stress test. Instead of providing banks with predefined scenarios and having them calculate the impact on their capital and liquidity buffers, each institution will this time be required to envision geopolitical events that could lead to a drop in their Common Equity Tier 1 (CET1) ratio by at least 300 basis points, and to assess how these events would affect liquidity and refinancing conditions. A total of 110 banks directly supervised by the ECB must undergo this stress test on geopolitical risks, with the results expected to be published in the summer.<\/p>

Grasshoff welcomes this new approach: \u201cBuilding stress tests solely on past data and developments falls short.\u201d After all, this merely simulates how a bank would perform under the parameters of previous crises. \u201cThe real idea should be to develop scenarios that reflect expected structural breaks. In this context, attention should also be paid to the so-called reverse stress test \u2014 that is, the question of what would actually constitute an existential risk for the bank. This also includes exposure to China.\u201d<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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Source: B\u00f6rsen-Zeitung, 13.2.2026<\/em><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Risk expert: Banks are facing challenges from America-First policies and a multitude of economic, technological, and geopolitical risks<\/p>\n<\/div>","protected":false},"author":7,"featured_media":52129,"comment_status":"closed","ping_status":"open","sticky":false,"template":"template-fullwidth.php","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[858,241,105],"tags":[1067,1068,404,1066,1065],"class_list":["post-52124","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-artificial-intelligence","category-international","category-top-news","tag-america-first-policy","tag-economic-uncertainty","tag-financial-industry","tag-geopolitical-risks","tag-risk-management"],"acf":[],"publishpress_future_action":{"enabled":false,"date":"2026-06-30 13:06:14","action":"change-status","newStatus":"draft","terms":[],"taxonomy":"category","extraData":[]},"publishpress_future_workflow_manual_trigger":{"enabledWorkflows":[]},"_links":{"self":[{"href":"https:\/\/frankfurt-main-finance.com\/en\/wp-json\/wp\/v2\/posts\/52124","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/frankfurt-main-finance.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/frankfurt-main-finance.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/frankfurt-main-finance.com\/en\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/frankfurt-main-finance.com\/en\/wp-json\/wp\/v2\/comments?post=52124"}],"version-history":[{"count":5,"href":"https:\/\/frankfurt-main-finance.com\/en\/wp-json\/wp\/v2\/posts\/52124\/revisions"}],"predecessor-version":[{"id":52189,"href":"https:\/\/frankfurt-main-finance.com\/en\/wp-json\/wp\/v2\/posts\/52124\/revisions\/52189"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/frankfurt-main-finance.com\/en\/wp-json\/wp\/v2\/media\/52129"}],"wp:attachment":[{"href":"https:\/\/frankfurt-main-finance.com\/en\/wp-json\/wp\/v2\/media?parent=52124"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/frankfurt-main-finance.com\/en\/wp-json\/wp\/v2\/categories?post=52124"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/frankfurt-main-finance.com\/en\/wp-json\/wp\/v2\/tags?post=52124"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}