Measuring and managing market, credit and Op risk [12]

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Bullet points include: Matthew Patterson, CEO of QKR Financial, popped his nose into Julia Trenchard’s office. “Who said: ‘Every object we see will appear larger at midnight than at midday, and larger in the morning than at midday. This happens because the pupil of the eye is much smaller at midday than at any other time’?”. Julia, QKR’s CRO, admitted that she did not know. Matthew responded: “My point is, Julia, that risks that are uppermost in the market’s (and regulator’s / clients’ minds), especially ones that relate to the most recent past events, are ‘brighter’ and thus in some sense ought by us to be viewed as ‘more important’. How do you think that we should be weighting different elements of the past when assessing future possible risks to our business and to our clients’ portfolios? Come to think of it, why limit ourselves to downside risk? How do you think we should be doing likewise when exploring possible upside opportunities?”

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