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The concept of financial risk and the realties of financial risk management.
Understanding risk and weighing risk against reward have become central to all commercial activity in particular to the financial markets.The concept of risk management used to refer to exclusively to the insurance industry but it was hijacked by wizards in financial institutions in the1980s, initially to make their gambling in the markets seem more respectable.Good risk management requires a constant sharpening of one’s awareness to new risks and to the probabilities of different outcomes.
This guide will increase the reader’s risk awareness, by presenting concepts in a simple and entertaining way, and by explaining the endeavours, mistakes and successes of others, as they have tried to identify, measure and simplify risk, and make it work for them.
It looks at swaps, futures, options, derivatives, hedging principles, formulas, Monte Carlo simulations, chaos theory, neural networks, Raron (or risk-adjusted rate of return on capital), stress tests, worst case scenarios and all kinds of games that are played in the cause of managing risk.
With great panache, colour and clarity David Shirreff does a remarkable job of throwing light on one of the most complicated aspects of business and finance.
Content: Acknowledgement • Introduction Part 1 Financial risk: an endless challenge: The growth of modern financial markets • Market theory • Derivatives and leverage • Temples to risk management • Models for Everyman • Credit models get a thrashing • The rise of the firm wide risk manager • Basel 2 is born – a new regulatory regime • In praise f liquidity, funding and time horizons • Art exhibitions • Sibylline books • The play’s the thing • What lies ahead Part 2 Risk in practice: real and simulated examples: • Lessons from metallgesellschaft • Lessons from the collapse of long-Term capital management • The crash of mulhouse brand • The sigma affair • References • Glossary of key terms ISBN - 9781861975911
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Pages : 214
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