Avoid Crisis By Marking Your Technology To Market

The collapse of Silicon Valley Bank (SVB
VB
) delivered a powerful lesson about the importance of marking assets to market. That lesson shouldn’t just apply to banks and investors. Technology professionals working in financial services should consider how they put firms at risk when they fail to accurately benchmark the value of their technology stacks and capabilities against technology assets across the industry.

Marking to market means adjusting the recognized value of an asset to reflect the most current market price. In the case of SVB, the bank had amassed a large portfolio of long-dated treasury bonds. The value of those bonds dropped dramatically when interest rates rose. However, because the bank was not required to mark the value of those long-term assets to market, investors were in the dark about the losses. Had the bank been marking those assets to market all along, it would have been forced to acknowledge the losses much earlier and presumably set aside additional reserve assets or take some other preventative action before disaster struck.