The Handbook of Risk Management Implementing a Post-Crisis Corporate Culture

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  • Edition: 1st
  • Format: Hardcover
  • Copyright: 2010-04-26
  • Publisher: Wiley
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Supplemental Materials

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This handbook shows a firm how to repurpose its risk management in order to design and implement a corporate culture which involves all business units and individuals at each level of the hierarchy, how to analyse its risk appetite, translate it into risk policies and risk targets and distribute responsibilities and capabilities accordingly. The book explains how to identify risk exposure across the enterprise; how to empower each business unit with risk management capabilities; how to create an information workflow for preventative decision making; how to align funding strategies and liquidity management tactics with corporate risk policies and finally, how to deal with risk management in external communications.Philippe Carrel (Geneva, Switzerland) is Executive Vice President, Global Head of Business Development in Risk Management, at Thomson Reuters. Specialist of derivatives valuations and regulatory compliance, he was previously Head of Alternative Investments Strategies at Reuters in New York and Director of Risk and Trade Management at Reuters head office in London.

Author Biography

PHILIPPE CARREL, is Executive Vice President, Risk Management, at Thomson Reuters, based in Geneva, Switzerland. He is currently specializing in aspects of 'Implementing Risk Management as a Corporate Culture' at banks and asset management companies globally. In his special assignment to define 'Post-Crisis Risk Management' with key financial institutions and regulators, he helps risk executives and senior managers dealing with the constraints and uncertainties of the financial markets through a new concept he identifies as 'Risk Intelligence'.

A specialist in financial derivatives, valuations and regulatory compliance, he was previously Head of Alternative Investments Strategies at Reuters in New York, and Director of Risk and Trade Management at Reuters' head office in London. Until joining Reuters, Philippe directed advisory services for banks and securities companies on derivatives risk measurement, hedging and trading strategies, which followed a career dealing securities and derivatives in Europe and Asia. Philippe also advised regulatory authorities, professional associations and exchanges in emerging markets across Asia and directed a financial training institute for many years.

Author of countless articles and white papers, he regularly lectures at high profile seminars and conventions around the world on risk management, hedge fund strategies, and regulatory compliance. A strong advocate of change in risk management methodologies, he had warned about systemic risk since 2005. His blogs and papers on the changing faces of risk management are publicly available at www.valuationrisk.net and other Thomson Reuters sites. Philippe is an active member of the Global Association of Risk Professionals (GARP), of which he co-directs the Geneva Chapter. He also participates to the financial derivatives programmes of leading universities, training and research institutes. He holds a diploma from the ESC Marseille, a member of the French Grandes Ecoles network.

Table of Contents

The essence of Capitalism
The move to models when risk ceased to be managed
The decade of risk management
Risk intelligence precedes risk management
Risk management the human dimension of capitalism
Risks scales and balances
A risk culture is corporate DNA
Distributing Risk Exposure And Sensitivity Across The Enterprise
Identifying risk factors
Specific risk factors
Systematic risk factors
Working with Risk Factors
Approaching risk through sensitivity and scenarios
Root-Risk Factors and Conduits of Sensitivity
Back-testing and maintaining the factors
Working with scenarios
Scenario Definition
High Severity and Worst-Case Scenarios
Aggregating firm-wide risk sensitivity
Aggregating Scenarios
From aggregated risks to distributed risks
The traditional approach by business lines leads to rely on modeling
Distributing risk by risk factors leads to creation of a culture
Distributed risk implies data analysis
Creating and adaptive information workflow
Getting the system to evolve
Moving on to the next step
Empowering Business Units With Risk Management Capabilities
Allocating risk management capabilities
Business managers are risk managers
The role of Executive Risk Committees
The role of Audit and Control units
Mitigation strategies and hedging tactics
Front-line business units
Operational units
Risk Committees and audit controls
Risk independence or indifference to risk?
Role of the shareholders and non-executive directors
Responsibility and accountability
Control and report hierarchy
Risk weighted performance
Principles of risk weighted measurements
From risk appetite to risk policies
Creating An Information Workflow For Continuous Feedback And Informed Decision Making
Risk: The new bond
Dynamic two-way information workflow
Preventive rules for a pre-emptive course of action
The dynamic assessments of risk factor sensitivities
Sensitivity rules and stress tests
Bottom-Up Activity Feedback
Keeping a finger on the pulse
Aggregating scenarios: The actual risk appetite of the firm
Toward a Risk Information Bus for IT Purposes
Enterprise-wide Aggregation
Cross-asset sensitivity aggregation
Cross-division aggregation potential pitfalls
Top Down Decisions and Feedback
Risk dashboards
Pre-emptive decision frameworks
An interactive and adaptive workflow
Hierarchy, decisions, overruling
Deriving a firm's Actual Observed Risk Appetite
Modeling Worst Case Scenarios
Risk Policies Reconciliation
Aliging Funding Strategies And Liquidity Management Tactics With The Corporate Risk Policies
Liquidity, the Ultimate Operational Risk
Maintaining the internal balance
Internal sources of liquidity risks
External sources of liquidity risk
Analysing and Measuring Liquidity Risks
Valuation Driven Liquidity Risks
Market Depth
Over the Counter Markets
Funding Risk
Asset Liability Risks
Systematic sources of liquidity risks
Concentration Risks
For sell-side institutions:
For buy-side institutions:
Managing and Mitigating Liquidity Risks
Laying down the foundations of a corporate strategy
Monitoring Concentrations
Working with risk concentrations
ALM analyses and Liquidity Management
Valuations Risks
Regulatory Risk
Of liquidity risk and correlation
Funding strategy is risk profile
External Communications, Disclosure Policies & Transparency
External communications
Risk, the new media
Disclosure policies
Enhancing transparency
Prices and valuations transparency
Transparency of internal processes and procedures
Transparency of corporate governance rules and external communications
Information exchange for risk intelligence
Proposal for a Global Credit and Collateral Exposure Surveillance Scheme
Proposal for a taxonomy of path dependent derivatives and retail structured products
Risk intelligence ratings
The Regulatory Upheaval Of The 2010S
The Great Unwind
Regulatory reshuffle
Propositions for a regulatory upheaval
Propositions relating to idiosyncratic risks
Propositions relating to systematic risks
Propositions relating to systemic risks
Table of Contents provided by Publisher. All Rights Reserved.

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