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The Doom Loop in the Financial Sector : And Other Black Holes of Risk - William Leiss

The Doom Loop in the Financial Sector

And Other Black Holes of Risk

Paperback Published: 30th October 2010
ISBN: 9780776607382
Number Of Pages: 190

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In the past two years, the world has experienced how unsound economic practices can disrupt global economic and social order. Today's volatile global financial situation highlights the importance of managing risk and the consequences of poor decision making.

"Systemic Financial Risk "reveals an underlying paradox of risk management: the better we become at assessing risks, the more we feel comfortable taking them. Using the current financial crisis as a case study, renowned risk expert William Leiss engages with the new concept of "systemic risk" -- risk so great that recovery from its negative consequences may prove impossible. His risk-centred analysis of the lead-up to the crisis reveals the practices that brought it about and how it became common practice to use limited risk assessments as a justification to gamble huge sums of money on unsound economic policies.

In order to limit future catastrophes, Leiss recommends international cooperation to manage systemic risks. He believes that, failing this, humanity could be susceptible to a dangerous nexus of global disasters that would threaten human civilization as we know it.

Prefacep. ix
Acknowledgementsp. xvi
Black Holes of Riskp. 1
Systemic Riskp. 2
Super-Systemic Riskp. 4
Testing the First Atomic Bombp. 7
A Coronal Mass Ejectionp. 10
A Smaller Asteroidp. 14
The Convoluted Tale of the Particle Collidersp. 15
A Reasonable Selection of Plausible Black-Hole Risksp. 19
Systemic and Super-Systemic Risk in the Financial Sectorp. 21
Introductionp. 21
Systemic and Super-Systemic Risk in the Global Financial Sectorp. 28
A Brief Primer on Financial Derivativesp. 36
Prelude to Global Financial Crisisp. 38
Types of Financial Risksp. 44
The Regulatory Response to Systemic Financial Riskp. 46
A Vapid Risk Management Paradigmp. 54
The "Standard Model" for Risk Managementp. 58
Dispersal of Riskp. 61
Correlationp. 71
Contagionp. 75
Complexityp. 80
Tight Couplingp. 84
Heterogeneity and Modularityp. 86
The "Value at Risk" Modelp. 90
Solutionsp. 93
General Conclusionsp. 99
Controlling the Downside Riskp. 108
Three Simple Steps for Good Risk Managementp. 108
Applying Precaution to Black-Hole Risksp. 119
Black-Hole Risk in the Global Financial Sectorp. 124
Risk of a Coronal Mass Ejectionp. 127
Risk from a Smaller Asteroidp. 128
Risk of Cyber-Warfarep. 129
Risk of Nuclear Proliferationp. 130
Risk of Climate Changep. 132
Conclusion: The Ugly Reality of Non-Linearitiesp. 135
Fragility in Complex Systems and the "Tipping Point" Problemp. 137
A Basic Integrated Risk Management Framework Table 2-1, Dimensions of Risk Managementp. 146
Works Citedp. 148
Indexp. 158
Table of Contents provided by Ingram. All Rights Reserved.

ISBN: 9780776607382
ISBN-10: 0776607383
Series: Critical Issues in Risk Management
Audience: Professional
Format: Paperback
Language: English
Number Of Pages: 190
Published: 30th October 2010
Publisher: University of Ottawa Press
Country of Publication: CA
Dimensions (cm): 20.32 x 12.7  x 1.27
Weight (kg): 0.18

Earn 72 Qantas Points
on this Book