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Profile IFRI – The International Financial Risk Institute – 20 Years in the Service of the Financial Industry from the Initiation to the Futures Markets to Strategic Risk Management On the occasion of the 25 th Bürgenstock meeting, SFOA chairman Paul Meier called IFCI SFOA’s elder daughter – this Institute offered a hearty Champaign toast to the celebrating SFOA and reports briefly about its own first twenty years below. 48 The space does not allow to thank all the institutions and more importantly all the personalities who created the institute and later had the courage and the necessary perseverance to assist it in its teaching innovations with the early PC’s and later the Web, but a longer version including the names can be found on the institute’s website on www.ifri.ch. The Institute marks its 20 th anniversary with three events: An informal barbecue bringing together several of its founders and most of its past employees at its original premises in Carouge on 1 September, the SFOA 25 th anniversary toast on Bürgenstock (courtesy Zurich Financial Services), and a luncheon presentation for its members and the members of the board of the Geneva Financial Center on the occasion of the 11 th Geneva Risk conference in December (courtesy The Geneva Financial Center). History and salient features IFCI was founded as a not-for-profit foundation in 1984 on the initiative of the SFOA and the major international Derivatives Exchanges, Commodity trading firms and other financial institutions with the objective to promote the understanding and to provide education, information and research in the area of Options and Futures markets. In 1986, SOFFEX selected IFCI’s Computer-based course on Options Trading as standard course. Other exchanges in their start-up phase, such as MATIF, MEFF, DTB later EUREX choose IFCI’s new CBT packages. IFCI produced a CBT module for TOCOM, translated into Japanese by NTT. From 1984 until 2004, IFCI and its partner institutions have trained thousands of traders and bankers on derivatives products and their proper use in seminars and computer-based training modules delivered in packages and including in some cases electronic examinations. Since the late nineties these packages are also partially on the Internet in English, French, German, Spanish, Italian, Japanese on five continents. Thanks to the early sponsorship by the American and European exchanges, the teaching packages could be further developed and with reasonable costs adapted to new developing markets in Eastern Europe, Asia (e.g. Malaysia), and Latin America (e.g. Brazil). From IFCI to IFRI – 1984–2004 H I S T O R Y Training & Examination for stock exchanges and OTC Market regulators meeting in collaboration with SFOA Know-How transfer from USA to Europe Focus on Risks Training & examination for the derivatives exchanges O N G O I N G Institute for the CROs Annual Risk Management Round Table for CROs & research publications since 1995 Web site since 1994 – www.ifri.ch Seminars and interactive PC-based packages in 6 languages and on 5 continents – later continued with partner institutions 1984 Création of the Fondation 1994 2000 2004 IFRI SWISS DERIVATIVES REVIEW 26 – NOVEMBER 2004
Profile Transition from derivatives and commodities to risk Beginning with its foundation in 1984 but increasing in the 1990s, the Institute was asked both by its members and academics not just to teach introduction and strategy seminars on derivative instruments with an objective to handle the challenge to enhance yields and to hedge portfolios professionally and more economically – but furthermore, to focus on the questions of financial risk and questions of professional risk measurement and risk transfer in the in industry. In the early nineties, several members of IFCI created a working group in order to study the questions of risk implied with the fast growth of the OTC market and threats caused by new “inexperienced participants” entering this industry. In 1994, the first research paper entitled: ‘Benefits and Risks of Derivative Instruments’ was published for the Institute by professors R. Gibson, now university of Zürich, and H. Zimmermann, now university of Basel. The first annual Risk Management Round Table of IFCI took place in early March 1995 – just one week after the meltdown of Barings – and brought together many of the experts who had to handle the crisis and to answer to stakeholders. In retrospect, this event served as a catalyst for further activities. Subsequent discussions and workshops among these risk professionals resulted in a series of publications, a website on financial risk and the will to bring the high-level risk professionals regularly together in an appropriate forum. An advisory council of IFCI under the presidency of Bob Gumerlock, followed by Tim Shepeard-Walwyn and including key risk officers from both sides of the Atlantic prepared the transition from IFCI to IFRI. Thanks to the quality of the following annual Risk Round Tables and the cooptation of further members as well as the early cooperation with the market regulators from the Basel Committee, IOSCO and others, the Institute grew gradually into the role of the Institute for Chief Risk Officers (CROs). Today, in the fall of 2004, the Institute has a stabilized organizational membership of 35. The Annual Risk Round Tables provide an established platform and forum for a fruitful exchange of ideas among their CROs and senior risk officials along with a few selected other senior risk management specialists. Patrick de Saint-Aignan, speaking on Strategic Risk Management at the 10 th Round Table. Objectives of the Institute as of 2004 The Mission of the International Financial Risk Institute (IFRI) is to provide opportunities to senior risk practitioners, especially the Chief Risk Officers of the world’s major financial institutions, to discuss and exchange ideas on both the principles and the practical application of financial risk management. The Institute thereby seeks to develop thought leadership and provide learning opportunities by and for senior risk professionals, with a view to enhance risk management best practice in the financial industry as a whole. To fulfill this Mission, the Institute has the following Four Objectives: 1) To provide confidential discussion forums for the most senior risk representatives of its members to address topical, complex, risk management issues and to help shape the strategic agenda for, and evolution of, the risk management profession in the future. 2) To provide an occasional exchange platform for IFRI members as well as the wider community of risk management industry bodies to leverage on the research and thought leadership work undertaken both by IFRI and others. 3) To provide support to a selective network of the most senior risk professionals so that they can easily exchange and benchmark ideas and developments in risk management 4) To produce and distribute occasional papers on topical risk management issues, aiming to link academic excellence with the practical requirements of workable solutions. These papers include academic research papers that have been vetted and enriched by discussion with risk practitioners, as well as shorter papers and articles for a wider distribution to the financial markets and regulators. (The Institute is not a lobby group to regulators, but will offer its public output to anyone who is interested in it.) 10 th Risk Round Table In May 2004, the 10 th Annual Risk Management Round Table was held at Danesfield House, UK. Patrick de Saint-Aignan, Member of the Advisory Board of Morgan Stanley Dean Witter, summarized well the key topic, Strategic Risk Management (SRM): Over the past two decades, risk management has become an essential discipline at many organizations, including most financial services companies. It has proven effective in limiting the potential for dramatic losses from market movements, changes in creditworthiness and operational failures and has become an integral component of tactical and operational management. Yet most risk management, as practiced today, does not address some of the most important risks faced by a firm – the strategic risks that can significantly erode a firm’s value, ability to compete or even its outright viability. Successful manage- 49 SWISS DERIVATIVES REVIEW 26 – NOVEMBER 2004
Page 1 and 2: SWISS DERIVATIVES ISSUE 26 - NOVEMB
Page 3 and 4: Contents Contents SWISS FUTURES AND
Page 5 and 6: Dear Members and Friends of SFOA Ed
Page 7 and 8: Focus Treasury. Then came Ginnie Ma
Page 9 and 10: “This approach moves us in the di
Page 11 and 12: WHEN YOUR FIRST NAME IS “NEW,”
Page 13 and 14: Focus Union’s regulators in terms
Page 15 and 16: “There’s no rule saying banks c
Page 17 and 18: The rush of endless opportunity. Li
Page 19 and 20: Further your future: team up with a
Page 21 and 22: “Investor interest in gold was re
Page 23 and 24: A new standard in the derivatives i
Page 25 and 26: “The Stone Age didn’t end becau
Page 27 and 28: A blazing sponsor for Friday night
Page 29 and 30: CNBC Europe reporting live from Bü
Page 31 and 32: A fascinating presentation by ballo
Page 33 and 34: “Swiss taxation is very advantage
Page 35 and 36: “These results seriously question
Page 37 and 38: D O W J O N E S I N D E X E S THE D
Page 39 and 40: “ ‘Carry’ strategies and even
Page 41 and 42: Education Chart 2 Overbought zone (
Page 43 and 44: Bollinger Bands Let’s briefly rev
Page 46 and 47: Emerging Markets A Perspective on E
Page 50 and 51: Profile 50 Official Publication of

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