Subprime risk management lessons

More documents

Recommendations

Info

Integral Risk Management: All Quadrants“I”Individual“It”» Integrity» Ability to questionSubjective/Interior» Measures» DataObjective/Exterior» Culture of riskmanagement“We”Collective» Systems» Processes» Policies» Organization“Its”» See Ken Wilber, “A Theory of Everything”www.riskmetrics.com 10
Levels: 3 Stages of Risk Management1. Pre-conventional: PrimalEmphasis on returnRisk taking driven by gut instinct and emotions: subjective view of riskActions and thinking dominated by principalsFocused on pieces (positions), not the whole (portfolio)2. Conventional: Rules BasedClassification of risks (operational, market, credit, liquidity, etc.)Implementation of standardized risk measuresRisk controlled with policies, procedures, and limitsHierarchical organization with clearly defined roles, including independent risk management functionFocus on quantifying, controlling, and minimizing risk: objective view of risk3. Post Conventional: IntegralProactive culture of risk management throughout the organizationConstant engagement and discussion about riskHarness intelligence both within and outside the organizationRisk viewed as both danger and opportunityEnterprise & portfolio perspective, not just position levelFlex flow, constantly evolving and improvingBlend of art and science: subjective + objectivewww.riskmetrics.com 11
Page 1 and 2: Subprime Risk Management LessonsAn
Page 3 and 4: Importance of Enterprise Risk Manag
Page 5 and 6: Lessons for Investors in Bear’s F
Page 7 and 8: Did VaR forecast the U.S. Subprime
Page 9: No Shortage Of Hypothetical Stress
Page 13 and 14: Questions?www.riskmetrics.comasia@r
Page 15: Addressing a Broad Spectrum of Risk

Subprime risk management lessons

Create successful ePaper yourself

Delete template?

Save as template?