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Learnings from the Superstorm

April 29, 2013

From the FSOC 2013 Annual Report with minor paraphrasing… • Planning and testing: It is important that your company and all of your important counterparties, vendors, and sub contractees, fully understand the functionality of contingency systems, and that key operations and business personnel communicate efficiently to assure enterprise-wide clarity. Expanded testing exercises would enhance assurance […]

A Learning Break

July 16, 2012

Riskviews has been taking a learning break. Some times we are refreshed and invigorated by getting away from anything relating to their primary occupation. But other times the most refreshing thing that you can do is to learn about how people faced with seemingly different, but fundamentally similar problems approach their work. Riskviews has been […]

Learning from Disaster – The Honshu Earthquake

May 17, 2011

Steve Covey called it Sharpening the Saw.  A good risk management program will be continually learning.  The school of hard knocks is an extremely expensive teacher.  It is much better to audit the course by observing the experiences of others and learning from them.  The effective risk management program will be actively working to audit […]

Risk Learning

January 18, 2011

ERM is a new and developing field. However, it is wrong headed to ever expect that it will fall into a simple set of repeatable practices. That is because of the nature of RISK. Risk has a way of changing and adapting to your risk management strategies.  Risk is like water looking for the weak […]

Learnings from the Financial Crisis (3)

August 17, 2009

Gone is not always gone – another of the underpinnings of the market risk business is the constant of trading of risks. However, in the case of sub prime, some of the counterparties in these trades were very intimately related to the banks that sold the risky securities. Sometimes, they were investment funds that were […]

Keys to ERM – Adaptability

April 3, 2017

Deliberately cultivating adaptability is how ERM reduces exposure to unexpected surprises. There are four ways that an ERM program encourages adaptability: Risk Identification Emerging Risks Reaction step of Control Cycle Risk Learning Many risk managers tell RISKVIEWS that their bosses say that their objective is “No Surprises”.  While that is an unrealistic ideal objective, cultivating […]

The History of Risk Management

August 28, 2014

Please find a new permanent page on RISKVIEWS – The History of Risk Management.  It is a simple list of major historical events that are important to Risk Management and ERM as it is practiced today.  This list was compiled with the help of INARM.  Risk Management development has not followed a particularly straight line.  […]

History of Risk Management

August 28, 2014

The following is a very incomplete outline of risk management history.  Most of these items were found on the internet.  So you can use this as a source for search terms.  Riskviews has some additional historical material about the Global Financial Crisis.  Risk management doubtless started earlier than 2000 BC.  The initial item cited below […]

Four Components of Resilience

July 13, 2013

Excerpt from The Resilience Renaissance Resilience thinking requires an acknowledgement of the fact that systems must learn to live with uncertainty and that change is inevitable. ‘“Expecting the unexpected” is an oxymoron, but it means having the tools and the codes of conduct to fall back on when an unexpected event happens’; these tools and […]

The Five F’s of Risk

May 30, 2013

Most people have heard of the human reflex when threatened: Fight or Flee But in fact, studies show that the most common reaction is: Freeze There are two additional reflexive reactions after an adverse event that have a big impact in Risk Management: Forgive and Forget “War does not determine who is right – only who […]

Future Uncertainty

April 16, 2013

Often called emerging risks. Going back to Knight’s definitions of Risk and Uncertainty, there is very little risk contained in these potential situations.  Emerging risks are often pure uncertainty.  Humans are good at finding patterns.  Emerging risks are breaks in patterns. What to Do about Emerging Risks… Emerging risks are defined by AM Best as […]

Has the risk profession become a spectator sport?

April 3, 2013

The 2013 ERM Symposium goes back to Chicago this year after a side trip to DC for 2012. This is the 11th year for the premier program for financial risk managers.   April 23 and 24th. This year’s program has been developed around the theme, ERM: A Critical Self-Reflection, which asks: Has the risk profession […]

Real Resilience is not what you think it is

January 30, 2013

There is confusion about the term Resilience.  To many people, it means the ability to withstand stress. To some people, the ultimate resilience comes from thick walls (or huge capital requirements).  The picture above is one of many thousands like it that shows the ultimate result of seeking resilience in a static manner. The dictionary […]

One Banker’s Frank Commentary on the Financial Crisis and the Way Forward

June 15, 2012

Excerpted from the 2011 annual report of  M&T Bank’s and written by the CEO, Robert Wilmers: Indeed, it is difficult, for one who has spent more than a generation in the field, to recall a time when banking as a profession has been publicly held in such persistently low esteem. A 2011 Gallup survey found […]

PRMIA Global Risk Conference – May 14-16, New York

April 14, 2012

Join peers, colleagues and pre-eminent speakers in risk and finance at the PRMIA Global Risk Conference and 10th Anniversary Gala celebration in New York, May 14-16, 2012. The conference presents leading approaches in risk management on: • Macro risks, regulations and their impact on financial services • Analytics for emerging risks in interconnected markets • […]

2012 ERM Symposium – Washington DC

March 30, 2012

The 2012 ERM Symposium will explore how risk professionals use ERM to meet their organizations’ challenges, especially those presented by the financial events of the past few years. ERM Symposium sessions will address issues, applications, and insights across a broad spectrum of industries and foster cross-pollination and collaboration of ERM professionals without regard to industry, […]

Psychologists Tend to Overgeneralize

March 5, 2012

With the obvious failures of neo classical economics in the Global FInancial crisis, Behavioral Finance has been raised as the best explanation that we have for “how things work” and many people are trying to use BF as a basis for how to go forward. BF is often held up as great work because its […]

Where Do You Hide?

September 9, 2011

US Hurricane Risk The lines on the graph represent the paths of the 50 most deadly US hurricanes on record.  The numbers on the lines are the number of deaths. One important thing to notice is that there is nowhere on the eastern or southern coasts of the US coast that has not experienced deadly […]

Crossroad of ERM

March 18, 2011

The ninth ERM Symposium in Chicago was the crossroads of ERM for a few days. Heard there: The Financial crisis was not the failure of regulators, except perhaps the OTS. Compliance culture of risk management in banks contributed to the crisis 85% of bank losses were from the structured finance area. Securitization was 30 years […]

The Difference between Risk & Loss

March 2, 2011

Risk Management has caused many people to substitute one four letter word for another.  They will use the word RISK when they should be saying LOSS.  And there is a world of difference between the two.  It is the difference between the gleam in eye of the loving newly weds and the cry of the […]

Liquidity Risk Management for a Bank

February 9, 2011

A framework for estimating liquidity risk capital for a bank From Jawwad Farid Capital estimation for Liquidity Risk Management is a difficult exercise. It comes up as part of the internal liquidity risk management process as well as the internal capital adequacy assessment process (ICAAP). This post and the liquidity risk management series that can […]

ERM Fundamentals

January 21, 2011

You have to start somewhere. My suggestion it that rather than starting with someone else’s idea of ERM, you start with what YOUR COMPANY is already doing. In that spirit, I offer up these eight Fundamental ERM Practices.  So to follow my suggestion, you would start in each of these eight areas with a self […]

ERM Books

June 11, 2010

There is a web resource for people looking for books and articles and papers to read (or assign to their students to read) about ERM. ERMbooks@wordpress.com There you will find information regarding over 30 sources for ERM reading and learning along with several lists of additional books and articles that were borrowed from several sources. […]

Another Fine Mess

May 9, 2010

High speed trading ran amok on Thursday, May 6.  It sounds like exactly the same thing that lead to the 1987 market crash.  There never was an explanation in 1987 and there most likely will not be one now. Why not?  Because it is not in the interest of the people who are in a […]

Volcano Risk (3)

April 25, 2010

Adverse events are all learning labs for risk managers.  We should not look at the event and say “We do not fly to Europe so we are not involved” and change the channel when it is being discussed.  We should be very actively listening of reports of how the event develops and what the impact […]

Volcano Risk

April 20, 2010

Remarks from Giovanni Bisignani (International Air Transport Association) at the Press Breakfast in Paris The Volcano There was one risk that we could not forecast. That is the volcanic eruption which has crippled the aviation sector.  First in Europe, but we saw increasing global implications.  The scale of this crisis is now greater than 9/11 […]

Corporate Finance

February 27, 2010

Learning Corporate Finance From Jawwar Farid Eleven years ago to this day I decided to start something that would help people who wanted to understand and learn finance, learn finance.  Eleven years later in a long forgotten folder, a dusty database yielded 150 concepts we had written for an online education venture that died in […]

New Decade Resolutions

January 1, 2010

Here are New Decade Resolutions for firms to adopt who are looking to be prepared for another decade Attention to risk management by top management and the board.  The past decade has been just one continuous lesson that losses can happen from any direction. This is about the survival of the firm.  Survival must not […]

Many Deadly Sins of Risk Management

November 16, 2009

Compiled by Anton Kobelev at http://www.inarm.org Communication Breakdown CEO thinks that risk management is the CRO’s job; Not listening to your CRO – having him too low down the management chain; Hiring a CEO who “doesn’t want to hear bad news”; Not linking the Board tolerance for risk to the risk management practices of the […]

Introduction to ERM

October 29, 2009

Versions of this course have been presented in: Chicago (2001) – Sponsor SOA Orlando (2001) – Sponsor SOA New York (2002) – Sponsor SOA Denver (2003) – Sponsor SOA Seoul (2005) – Sponsor Samsung Fire & Marine / Milliman Nairobi (2010) – Sponsor IAA Almaty (2012) – Sponsor IAA Mexico City (2012) – Sponsor IMF […]

Black Swan Free World (8)

October 26, 2009

On April 7 2009, the Financial Times published an article written by Nassim Taleb called Ten Principles for a Black Swan Free World. Let’s look at them one at a time… 8. Do not give an addict more drugs if he has withdrawal pains. Using leverage to cure the problems of too much leverage is […]

Black Swan Free World (3)

September 29, 2009

On April 7 2009, the Financial Times published an article written by Nassim Taleb called Ten Principles for a Black Swan Free World. Let’s look at them one at a time… 3. People who were driving a school bus blindfolded (and crashed it) should never be given a new bus. The economics establishment (universities, regulators, […]

Enterprise Risk Management for Smaller Insurance Companies

September 13, 2009

Guest Post By Max J. Rudolph, FSA CERA CFA MAAA http://www.rudolphfinancialconsulting.com/index.html In today’s volatile world insurance companies need an ERM framework in place to help manage risk. The path taken can vary, but iterative movements to improve risk culture and risk identification can lead to an optimization of the balance between risk and reward. Better […]

Jawwad Farid

September 6, 2009

Jawwad Farid is the founder and CEO of Alchemy Technologies, an enterprise risk practice that builds and deploys risk, treasury, market and credit risk platforms. He is a Fellow Society of Actuaries (Chicago), a MBA from Columbia Business School (New York City) and a computer science graduate. During the last 18 years, he has worked as […]