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Letters: A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Dealing with Financial Risk
Dealing with Financial Risk
Date: 22 April 2011, 07:55

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Dealing with Financial Risk is the best book I have read on taking an up-to-the-moment look at the financial risk that businesses, regulators, governments and markets experience. While many Nobel Prize winners will tell you that the market is efficient and rationally driven, anyone who works in the markets knows better. Mr. Shirreff takes a candid look at the best attempts by theoreticians and practitioners to eliminate risks . . . and reveals all of the ways that these efforts leave many risks in place.
This book is written to appeal to those who like to understand complex issues (such as how to measure the total exposure of a financial institution to derivative risk), people who enjoy reading about a good meltdown (Barings, Long-Term Capital Management and Metallgesellschaft), and those who like to do better by changing practices (such as by employing not only Monte Carlo simulations by also by advanced game playing in light of varying scenarios). This book will be equally rewarding to any of these three types of readers. However, do realize that only if you have all three interests will you find the entire book to be relevant to your interests. Those who are interested in only one of the three areas will be rewarded by finding ections that are pithy as well as accurate.
The amusing on-going story line in the book is that although institutions are taking on vastly more risk than ever before . . . and are not able to really understand and control where they are . . . they are relentlessly trying to convince regulators to let the institutions determine their own capital needs. It's certainly a recipe for disaster. For the most part the regulators have been wary. Let's hope they continue to be.

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