Risk appetite / Risk team structure [21]

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Bullet points include: Both (a) and (b) are generally needed if we want really effective risk management Easier to be precise about what people do if roles and demarcations clear Favours a separate risk team, akin to other ‘control’ functions Some stakeholders (e.g. regulators/supervisors) more strongly biased towards minimising risk of (large) loss than others (e.g. shareholders) Regulatory drive towards explicit risk functions in financial firms E.g. Walker Review (in UK), Basel II/III and Solvency II We will (mainly) concentrate on this model for the remainder of lecture

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