A review on collateral management and Risk-Weighted Assets (RWA) strategies: Challenges and solutions for financial institutions

The steady state of global economics demands financial institutions providing investment businesses and insurance firms who control capital flow and enforce risk regulations to align with regulatory requirements. Firms combining asset management methods with RWA optimization achieve two advantages by reaching financial requirements for bank capital yet adhering to banking regulation standards. This paper evaluates the present-day collateral management systems because they serve as essential risk mitigation tools to protect against financial market dangers. The regulatory framework defined by 'Basel III', 'CRD IV' and 'Dodd-Frank Act' establishes rules for both capital composition and collateral procedure regulations. Modern financial management technology receives evaluation because its combination of blockchain authentication systems, automatic portfolio controls, and AI analytical tools makes operations more performative while increasing visibility. Research explores RWA calculation by investigating methods for reducing credit risk and internal ratings as well as securitization approaches. This evaluation examines central obstacles because of liquidity challenges cybersecurity issues, and regulatory complexity through proposing multiple solutions. The research utilizes market information alongside contemporary tools to produce essential understandings about market-based risk structure development along with operational transformations and ability to adapt to market changes.