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Informationen zum Autor ERIK BANKS has held senior risk management positions in several global financial institutions. In 2001, Erik joined XL Capitals weather/energy risk management subsidiary, Element Re, as Partner and Chief Risk Officer. Prior to that he spent 13 years at Merrill Lynch, where he was Managing Director of Corporate Risk Management, responsible for the firms risk infrastructure; before that he spent 8 years abroad, managing Merrills credit and market risk teams in London, Hong Kong and Tokyo. Prior to joining Merrill Lynch in 1988 he was credit officer at Citibank and Manufacturers Hanover in New York. Erik is author of seven other books on risk, emerging markets, derivatives, merchant banking and electronic finance; he is also editor and co-author of a book on weather risk management, and is working on various new financial texts. Klappentext Erik Banks is a highly regarded finance practitioner and the author of several well-regarded finance books.* Fills a much-needed gap in the market for a more "qualitative" look at risk management. Zusammenfassung At its core, the successful management of risk is still largely an "art." This work takes a fresh look at the qualitative aspects of risk management. It also considers how qualitative approaches can make optimal use of the mathematical aspects of risk management to create the most effective framework possible. Inhaltsverzeichnis Acknowledgements xv Biography xvii 1 Introduction 1 1.1 Risk and risk management 1 1.2 Qualitative and quantitative approaches to risk management 2 1.3 Financial losses and failures of the risk process 6 1.3.1 Showa Shell Seikyu 8 1.3.2 Procter and Gamble 9 1.3.3 Metallgesellschaft 10 1.3.4 Orange County 10 1.3.5 Barings 11 1.3.6 Sumitomo Corporation 12 1.3.7 Long Term Capital Management (LTCM) 13 1.3.8 Enron 14 1.3.9 Allfirst 15 1.4 Diagnosing risk process problems 16 1.4.1 Flaws in governance 16 1.4.2 Flaws in identification and measurement 17 1.4.3 Flaws in reporting and monitoring 17 1.4.4 Flaws in management 18 1.4.5 Flaws in infrastructure 19 1.5 Strengthening risk practices 20 1.6 The simple rules of risk 21 1.6.1 The cardinal rules 22 2 Philosophy of Risk 25 2.1 Risk-taking should be aligned with other corporate priorities, directives and initiatives 25 2.2 Risk should be viewed on an enterprise-wide basis in order to understand how it impacts the entire organization 27 2.3 Deciding to become an active risk taker without implementing a robust risk process is likely to lead to financial losses 27 2.4 Actively assuming risk requires support from key stakeholders and commitment of necessary financial resources 28 2.5 Risk generates profits, and can therefore benefit a firm - it must, however, be managed properly 28 2.6 Risk is a finite resource that is driven by capital 29 2.7 Risk capacity is not free and proper compensation must be obtained; the process should be disciplined and applied without exception 30 2.8 More risk should be taken when it makes sense to do so - but only if the reasons are well established and the returns appropriate 30 2.9 A robust risk/return framework should be used to evaluate the performance of risk-taking activities 31 2.10 Risk-taking should be confined to areas in which a firm has technical expertise and a competitive advantage 31 2.11 "Worst case scenarios" happen with considerable frequency in an era of volatility and event risk. the lessons of history - financial cycles and crises - provide useful risk information 31 2.12 Understanding the dynamics of different risk classes can help define an approach to risk 32 2.13 Senior management should know the strengths, weaknesses, motivations, ...
