ERM Concepts [12]

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Bullet points include: Quantitative? Qualitative? Risk measures, hedging, pricing, ... Governance, culture, disciplines, policies, ... Value-at-risk, TVaR, Probability of default, expected/unexpected loss, maximum loss, volatility, RAROC, economic capital, mathematical techniques. Risk appetite statements, risk challenge, misalignment of interests, Board engagement, risk capture and ranking, workshops, processes, ... Answer: both. E.g. stress testing and reverse stress testing. Involves defining scenarios that might be problematic, with less focus on probability of outcome (although usually still some quantification of impact)

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