Measuring and managing market, credit and Op risk [65]

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Bullet points include: Many types of operational risk are associated with ‘agency problems’ I.e. difficulty principals have in getting their agents to do what the principal wants, particularly because of incentive misalignments E.g. employee (or outsource service provider) may behave contrary to what senior management / shareholders want Control and mitigation not same as controlling, say, market risk Market / credit / liquidity risk ultimately driven from external factors coupled with firm choice to carry these risk exposures Much operational risk mitigation involves improving systems for monitoring / controlling firm’s own risk-takers and improving incentives applying to them

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