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Measuring and managing market, credit and Op risk [69]

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Bullet points include: If f is likelihood of committing a fraud and m is likelihood, conditional on not committing a fraud, that individual monitors subordinate then: Fraud reduced by: Reducing cost of monitoring (M) Raising utility gain from detecting fraud (G) Monitoring (which is itself costly) decreased by reducing gain to successful fraudsters (F) and increasing cost of being caught or associated with fraud (C) Lesson: to reduce fraud, facilitate monitoring

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