This blog post was originally published by GARP.
This May saw the third installment of Marvel’s Iron Man film franchise. Amid the new movie buzz, it is striking that the super hero world offers a surprisingly unique way to explore different approaches to risk management. By comparing two competing superheroes and their infinite powers, we can ask ourselves, who would make the most effective risk manager – LA resident Tony Stark or Gotham’s own Bruce Wayne?
At a glance, the two characters are very similar. They both inherited large corporations and enormous wealth, have an obsessive interest in technology which they utilize to control high end crime and they have a number of stakeholders to address both as civilians and heroes.
Despite these similarities, they do have significant differences, particularly in their approaches to risk management. It is these differences that map so well to the different approaches that financial institutions can take to their own internal risk management functions.
This blog post originally appeared on TabbFORUM.
Risk can and should be seen as the core of a financial institution. The management of risk has become an industry in itself, led in turn by regulatory drivers, technological advancement, trading floor developments and quantitative research. In this blur of evolution, it is easy to lose sight of exactly what is required of the risk department, and it is worth taking a step back to refocus on what is important.
This blog post was originally published by DerivSource.
In March of 44 BC, Gaius Julius Caesar was killed on the steps of the Forum of Rome – before his ambition to centralize power in the Republic, removing the checks and balances of Roman politics, could be fully realized. It is striking that the date for mandatory clearing is set for mid-March 2013, and there are clear parallels to March 15, 44 BC, better known as the Ides of March.
This blog post was originally published on TabbFORUM.
It’s 2013. The days are lengthening again, and the risk world is facing an environment that is more concrete, while remaining every bit as challenging as it was before the millennium became a teenager.
The challenges faced by risk departments everywhere are well known, and include rafts of new regulations from Basel and Dodd-Frank, and data sets including the recent financial crisis, pointing to very likely high volatility in the months and years ahead, central clearing making calls to the risk management quant teams, and a low inflation/interest rate state continuing to cause anxiety in the pension world. With such a backdrop, it is easy to see risk management as an exercise in compliance at the lowest cost, but as Brad Pitt playing Billy Beane in the baseball movie “Moneyball,” demanded of his staffers: Are we asking the right question?
Friday August 17, 2012 sees a most unusual board meeting in downtown New York. Representatives from the largest banks on Wall Street, private equity firms, and Main Street gathered at Pier 40 for what may be the most cordial coming together of year. I am lucky enough to be at the event. It is, of [...]
Right now, there is a noticeable change occurring in the approach to risk management on the buy side, particularly within the pension fund area.
Traditionally, pension funds have been measured against a few core metrics… but market changes are challenging the traditional approach.
This blog post originally appeared on GARP – Global Association of Risk Professionals. The late, great Warren Zevon sang about werewolves living it up in his sardonic 1978 classic “Werewolves of London.” It seems there may be more metaphorical truth to this song than meets the eye. In his recently published book, The Hour Between [...]
When considering current industry views on volatility risk, it should be noted that traditionally, profitability of trading and investment banking fed on volatility. The terms “volatility” and “risk” can almost be used interchangeably; good risk management could be defined as effectively managing the varying levels of uncertainty from an expected outcome. The greater the uncertainty [...]
This blog post also appears on Risk Management Monitor. A couple of weeks ago, there was a house fire at my home. It is important to state at the start that nobody was hurt, and the house is now in a restoration stage. Afterward though, it occurred to me that I write, speak, and consult [...]
I recently participated in another Twitterview with DerivSource, who asked me several questions about transformations happening in the post-trade processing space. Within the context of regulatory reform, firms are recognizing the need to make changes to meet new rules, both those that have been identified and those still to be determined. In the Q&A, we [...]