ERM Concepts [8]

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Bullet points include: No single universally applicable ERM framework. Organisations differ in size, structure, product range, supply-chain complexity, geographical coverage. And in culture, leadership, personalities. Few people usually have the ‘big picture’ to appreciate what is needed. Contrast banks and insurers. Banks traditionally focused only on asset-side risks, insurers on both assets and liabilities (at least that is the perspective of insurers!). Actually bank trading books utilise sophisticated quantitative risk measurement and management techniques, with large IT spends. But did this help banks during 2007-2009 credit crisis, or were they ‘seduced’ by the apparent ability of models to handle risks in times when liquidity was plentiful?

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