Risk Research Report

Risk Research Report is released on a monthly basis and covers a broad range of risk related issues specific to the investment banking industry. Risk Research Report will be of great value to you if you:

Have a series of specific and well-defined questions
Need a quick turnaround of findings
Want to keep abreast of the "hot issues" in the industry on an on-going basis

Several options for Risk Research Report annual subscription are available ranging from contracts with a minimum of 3 and a maximum of 12 topics commissioned by you.

Regardless of the subscription option you pick (e.g. 3, 6 or 12 topics of your choice to be researched), you will receive 12 issues of the Risk Research Report with the collection of topic commissioned by all the subscribers.

Major Developments in Risk Management

With financial institutions and supervisory bodies coming under much criticism in the last 24 months, it is of no surprise that the industry has seen major changes in risk management. This report explores the attempts made to rectify the problems the credit crisis exposed, and considers the steps being taken to prevent it happening again.

VaR and RNIV

Despite recent events, Value at Risk (VaR) remains an important tool in risk management. However, the weight that is placed on the results returned by VaR models has changed over the recent years. Banks are now more focused on other metrics, such as stress testing and scenario analysis. This report considers VaR and the risks that are not captured within the VaR model.

Model Risk Management

This report examines Model Risk, and looks at what banks are currently doing to identify and monitor it effectively. The report indentifies the strengths and weaknesses of financial models as perceived by those who use them.

Dark Pools of Liquidity – The Risks

While official reports have now declared the end of the recession, global regulatory action is gaining vigour. Like the great Terror of the French Revolution, no-one and nowhere is safe from investigation. In recent times, one such avenue under increased scrutiny pertains to the off-exchange trading books known as ‘dark pools’ – trades not displayed on order books. Equities markets functioned perfectly during the financial crisis and the finger of blame for the downturn has been pointed very firmly in other directions. However, regulators appear zealously committed to ensuring that such a crisis never occurs again.

Location of Market Risk Personnel

To a certain extent, it can be stated that the weight the opinion of the risk manager carries has increased of late. However, at some banks, traders are still able to execute unauthorised trades in pursuit of higher revenues, resulting in the risk managers’ engagement with the legal department. This is an example of a more extreme scenario, and at each bank there will be a somewhat different culture and/or ethos. Moreover, the relationship with the traders will depend on a number of different factors; one such factor being the proximity between the risk manager and the trader.

Alignment of Risk and Finance

Failures of large institutions across the globe over the past 2 years, were partly contributed to by the breakdown in communication between the risk manager, senior management and the boardroom. Whilst many financial institutions complied with the ensuing legislation by aligning risk and finance functions, the credit crisis highlighted that a silo’d culture still prevailed, even in such areas where risk and finance shared similar responsibilities.