Prompt Title: SVB Financial Solvency Risk

Consider this hypothecal scenario: the current year is 2021, and the fed funds rate is targeted 0 to 0.25% and has been for about 10 years. A bank reported the following asset allocation on its balance sheet for the most recent year: (Dollars in millions, except per share amounts) 2022 2021 2020 Interest income: Loans $ 3,208 $ 1,966 $ 1,520 Investment securities: Taxable 2,113 1,199 635 Non-taxable 140 106 61 Federal funds sold, securities purchased under agreements to resell and other short-term investment securities 212 18 26 Total interest income 5,673 3,289 2,242 Interest expense: Deposits 862 62 60 Borrowings 326 48 25 Total interest expense 1,188 110 85 Net interest income 4,485 3,179 2,157 Provision for credit losses 420 123 220 Net interest income after provision for credit losses 4,065 3,056 1,937 Noninterest income: Gains (losses) on investment securities, net (285) 761 421 Gains on equity warrant assets, net 148 560 237 Client investment fees 386 75 132 Wealth management and trust fees 83 44 — Foreign exchange fees 285 262 179 Credit card fees 150 131 98 Deposit service charges 126 112 90 Lending related fees 94 76 57 Letters of credit and standby letters of credit fees 57 51 47 Investment banking revenue 420 459 414 Commissions 98 79 67 Other 166 128 98 Total noninterest income 1,728 2,738 1,840 Noninterest expense: Compensation and benefits 2,293 2,015 1,318 Professional services 480 392 247 Premises and equipment 269 178 127 Net occupancy 101 83 101 Business development and travel 85 24 24 FDIC and state assessments 75 48 28 Merger-related charges 50 129 — Other 268 201 190 Total noninterest expense 3,621 3,070 2,035 Income before income tax expense 2,172 2,724 1,742 Income tax expense 563 651 448 Net income before noncontrolling interests and dividends 1,609 2,073 1,294 Net loss (income) attributable to noncontrolling interests 63 (240) (86) Preferred stock dividends (163) (63) (17) Net income available to common stockholders $ 1,509 $ 1,770 $ 1,191 Earnings per common share—basic $ 25.58 $ 31.74 $ 23.05 Earnings per common share—diluted 25.35 31.25 22.87 Please assess the following risks as it pertains to this bank financial's solvency, providing an impact, likelihood, and RAC score for each. Please use a 5 point scale forboth impact and likelihood. price impact as measured by cpi interest rate risk economic recession Price changes in the housing market pandemic, war and natural disasters a run on the bank Based on the computed RAC score, identify the one risk the poses the most significant threat to the bank financial solvency ?