Thread by @SAH16928046

Risk Management is not just about producing tons of reports that nobody wants to read in the office.
I am very angry to note that most of the #ERM/Risk Desks just produce day-end reports, which end up in the dustbin.
Risk Dept. should not be a tick the box function.

what is the point of preparing #VaR Reports, when the fund manager does not understand basic probability?
Rubbish!!

There is no point in hiring a world-class hard science PhD to do risk management work at financial institutions or elsewhere, if the board members have zero numeracy and data science skillsets, the staff in front and back offices have poor technical and academic backgrounds, etc

Even the customer's knowledge base matters.
Especially, where banks and other financial vehicles sell complex products or derivatives to hedge portfolio exposures, the client must have the acumen to comprehend risks in transactions.
Importer/Exporters should not buy forex options

I remember the argument that took place between the treasury fx dealing desk that provided hedging solutions to international businesses where I worked in the MO.
The client bought Lookback Asian #Options, but, had no clue on how to use multiple knock-in & knockout #strikeprices.

It is never advisable to sell #complex financial hedging products or other speculative structures to simple-minded businesses or individual clients.
Always offer simple #Currency #FRA (Forward rate agreement) #OTC-Over-the-Counter to hedge #remittance proceeds #risk.

The #GFC took place because the financial institutions on Wall Street in particular, and elsewhere in general, didn't have a clue about the inherent risks that existed within the financial products they were selling.
Consequently, the risk desks were not able to manage the Crisis

Let's stick to simple risk management, the way #Auditors used to do this in the past.
IR (Inherent Risk before applying controls) - RR (Residual Risk after applying controls) = Risk Appetite
@TheIIA @GARP_Risk @CQFInstitute @actuarynews