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The Shape of Risk : A New Look at Risk Management - Charles A. Fishkin

The Shape of Risk

A New Look at Risk Management

Hardcover Published: 1st July 2005
ISBN: 9781403932884
Number Of Pages: 400

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Written by an experienced risk manager, this innovative new book explores the core concepts of risk management, including in-depth coverage of its scope, rationale, and practical applications. In addition to being fundamentally important to risk managers, this text will also be invaluable to senior executives, directors, regulators, and capital markets professionals. Students, lay readers, and others interested in finance will find a vast subject made engaging and accessible. Written with unusual clarity, The Shape of Risk makes use of graphics, case studies, and questions. The author encourages readers to develop their own intuition and judgment for identifying and managing risk. This is an excellent starting point for a new generation of readers who increasingly need a both practical and conceptual understanding of risk management.

'Mr Fishkin's new book, exploring the core concepts of risk management, is a useful work for senior management.' - Accountancy Ireland



'...we bankers are truly fortunate that Charles Fishkin has had the good judgement to provide us with another fine addition to our risk management libraries. His Shape of Risk merits a place on our shelves not only because of its well-organised structure, but also because of the attention he focuses on the organizational aspects of risk management... If Cicero's contention that fortune, not wisdom, rules man's life, then it's worth the risk to buy and read this book and gain a little wisdom on the way to good fortune.' - Dev Strischek, Risk Management Association Journal

List of figuresp. xvii
List of exhibitsp. xix
Forewordp. xxiii
Prefacep. xxv
Principlesp. 1
Risk: A Shape to be Drawnp. 3
Overviewp. 3
Introductionp. 3
Types of models in financep. 8
The value of imagesp. 17
Learning to observep. 21
Conclusionp. 22
"A shape to be drawn": the discovery of the structure of DNAp. 23
Summary, questions, and next stepsp. 25
Looking ahead to the next chapter: Defining risksp. 26
Further readingp. 26
Key termsp. 28
Definitions: Categories and Choicesp. 29
Overviewp. 29
Introductionp. 30
Types of risk: another lookp. 30
Applying the definitionsp. 36
Conclusionp. 42
Summary, questions, and next stepsp. 43
Looking ahead to the next chapter: Risk managersp. 44
Further readingp. 44
Key termsp. 45
Risk Managers: Map Makersp. 47
Overviewp. 47
Introductionp. 47
The new risk managerp. 48
Qualities of risk managersp. 49
Wide range of rolesp. 52
Conclusionp. 57
Summary, questions, and next stepsp. 57
Looking ahead to the next chapters: Credit, market, and operational riskp. 58
Further readingp. 58
Key termsp. 59
Credit Risk: A Traditional Challengep. 61
Overviewp. 61
Introductionp. 62
Definition of credit riskp. 62
Nature of credit riskp. 70
Hedge fund credit riskp. 70
Conclusionp. 75
Summary, questions, and next stepsp. 75
Looking ahead to the next chapter: Market riskp. 76
Further readingp. 76
Key termsp. 77
Market Risk: A New Challengep. 79
Overviewp. 79
Introductionp. 80
Defining market riskp. 80
Seeking market riskp. 82
Questions about market riskp. 85
The diverse nature of market riskp. 86
Market risk programp. 88
Struggling with market riskp. 90
Examples of problemsp. 91
Value at riskp. 93
Conclusionp. 100
Summary, questions, and next stepsp. 100
Looking ahead to the next chapter: Operational riskp. 102
Further readingp. 102
Key termsp. 102
Operational Risk: Everymanp. 103
Overviewp. 103
Introductionp. 103
The challenges of operational riskp. 104
Defining operational riskp. 106
Examples of operational riskp. 107
Sources of operational riskp. 109
Managing operational riskp. 110
Mergers and operational riskp. 113
Everyman and operational riskp. 115
Portraits of riskp. 117
Conclusionp. 118
Summary, questions, and next stepsp. 119
Looking ahead to the next chapter: Governancep. 120
Further readingp. 120
Key termsp. 121
Governance: Taking Actionp. 123
Overviewp. 123
Introductionp. 123
Defining governancep. 124
Governance in practicep. 127
Challenges of governancep. 128
Additional examplesp. 130
Components of sound governancep. 131
Warning signsp. 132
Conclusionp. 134
Summary, questions, and next stepsp. 134
Looking ahead to the next chapter: Getting startedp. 136
Further readingp. 136
Key termsp. 136
Challengesp. 137
Initial Steps: Thinking, Planning, Doingp. 139
Overviewp. 139
Introductionp. 139
Qualities of a risk programp. 140
Why get started?p. 141
Incremental progressp. 145
Influences on successp. 149
Additional stepsp. 150
Manageable tasksp. 151
Suggestionsp. 152
What to avoidp. 153
Conclusionp. 154
Creating the SEC's risk management programp. 155
Summary, questions, and next stepsp. 163
Looking ahead to the next chapter: Separation of dutiesp. 165
Further readingp. 165
Key termsp. 166
Separation of Duties: The Front, Middle, and Back Officep. 167
Overviewp. 167
Introductionp. 167
Singular intensity of purposep. 168
Right the first timep. 169
The need for differencesp. 170
Blurry linesp. 170
Complexities of the problemp. 173
The right balancep. 174
Conclusionp. 175
Summary, questions, and next stepsp. 176
Looking ahead to the next chapter: Peoplep. 177
Further readingp. 178
Key termsp. 178
People: The Silent Riskp. 179
Overviewp. 179
Introductionp. 179
Challenges facing risk managersp. 180
Roles of employeesp. 182
Relations with the front officep. 183
Managing the challengep. 184
Taking actionp. 185
Conclusionp. 190
Summary, questions, and next stepsp. 190
Looking ahead to the next chapter: Institutional knowledgep. 191
Further readingp. 192
Key termsp. 192
Institutional Knowledge: The Knowledge Factoryp. 193
Overviewp. 193
Introductionp. 193
What do we need to know?p. 196
Common problemsp. 197
Attempted efforts, neglected valuesp. 199
The way forwardp. 200
Core institutional knowledgep. 201
Conclusionp. 203
Summary, questions, and next stepsp. 203
Looking ahead to the next chapter: New productsp. 205
Further readingp. 205
Key termsp. 205
New Products: Managing Innovationp. 207
Overviewp. 207
Introductionp. 207
Three market examplesp. 209
Defining "newness"p. 214
New product processp. 215
Common problems and solutionsp. 215
The risks of electronic marketsp. 216
Conclusionp. 223
Summary, questions, and next stepsp. 223
Looking ahead to the next chapter: Measurementp. 225
Further readingp. 225
Key termsp. 226
Measurement: The Size of Riskp. 227
Overviewp. 227
Introductionp. 228
Rationalep. 233
Types of riskp. 235
Challengesp. 237
Approachesp. 238
Additional considerationsp. 239
Conclusionp. 240
Summary, questions, and next stepsp. 241
Looking ahead to the next chapter: Datap. 242
Further readingp. 242
Key termsp. 243
Applicationsp. 245
Data: Elements of Riskp. 247
Overviewp. 247
Introductionp. 247
What is risk data?p. 248
Benefits of datap. 250
Insight into risksp. 250
Enhancing the risk dialoguep. 251
Types of datap. 252
Challengesp. 254
Issuesp. 255
Problemsp. 256
Solutionsp. 256
Benefitsp. 257
Conclusionp. 257
Summary, questions, and next stepsp. 258
Looking ahead to the next chapter: Indicatorsp. 259
Further readingp. 259
Key termsp. 259
Indicators: Messages and Signalsp. 261
Overviewp. 261
Introductionp. 261
Case study: Global Bankp. 264
Hidden risksp. 265
Specific indicatorsp. 268
Introducing indicatorsp. 269
Suggested approachesp. 271
Conclusionp. 272
Summary, questions, and next stepsp. 273
Looking ahead to the next chapter: Technologyp. 274
Further readingp. 274
Key termsp. 274
Technology: Multiple Dimensionsp. 275
Overviewp. 275
Introductionp. 275
Uses of risk technologyp. 276
Benefitsp. 277
Role of judgmentp. 279
Applicationsp. 280
Standard technology versus custom solutionsp. 281
Buy versus buildp. 282
The merits of ITp. 285
Conclusionp. 286
Summary, questions, and next stepsp. 286
Looking ahead to the next chapter: OTC derivativesp. 288
Further readingp. 288
Key termsp. 288
Processesp. 289
Derivatives: Trading Safelyp. 291
Overviewp. 291
Introductionp. 291
Participantsp. 295
Before tradingp. 299
At tradingp. 304
Post tradingp. 306
General remindersp. 308
Broad principlesp. 310
Derivatives check listp. 310
Conclusionp. 314
Summary, questions, and next stepsp. 314
Looking ahead to the next chapter: Collateralp. 315
Further readingp. 316
Key termsp. 316
Collateral: Order and Complexityp. 317
Overviewp. 317
Introductionp. 317
Choicesp. 319
Collateral calculationsp. 320
Challenges of collateralp. 322
Examplesp. 323
Various risksp. 327
The special case of initial collateralp. 331
The portfolio implications of collateralp. 335
Conclusionp. 336
Summary, questions, and next stepsp. 336
Looking ahead to the next chapter: Master agreementsp. 337
Further readingp. 337
Key termsp. 338
Master Agreements: The Documentation Vortexp. 339
Overviewp. 339
Introductionp. 339
Challenges of master agreementsp. 342
Credit and operational risksp. 343
Solutionsp. 344
Benefitsp. 345
Implementing a logical planp. 346
The master agreement process step by stepp. 346
Conclusionp. 350
Summary, questions, and next stepsp. 350
Looking ahead to the next chapter: Summing upp. 351
Further readingp. 351
Key termsp. 352
Summing Up and Looking Aheadp. 353
Key propositions of risk managementp. 353
Further explorationp. 354
A few final pointsp. 356
Acknowledgments and personal reflectionsp. 359
Glossaryp. 367
References and further readingp. 385
Epiloguep. 391
Indexp. 393
Table of Contents provided by Ingram. All Rights Reserved.

ISBN: 9781403932884
ISBN-10: 1403932883
Series: Finance and Capital Markets Series
Audience: Professional
Format: Hardcover
Language: English
Number Of Pages: 400
Published: 1st July 2005
Publisher: Palgrave USA
Country of Publication: US
Dimensions (cm): 22.9 x 15.2  x 2.79
Weight (kg): 0.81
Edition Number: 1