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Post by Sapphire Capital on Oct 18, 2008 0:00:22 GMT 4
Risk Management Failures: What are They and When Do They Happen? Rene M. Stulz Ohio State University - Department of Finance; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI) October 2008 Fisher College of Business Working Paper No. 2008-03-017 Charles A. Dice Center Working Paper No. 2008-18 Abstract: A large loss is not evidence of a risk management failure because a large loss can happen even if risk management is flawless. I provide a typology of risk management failures and show how various types of risk management failures occur. Because of the limitations of past data in assessing the probability and the implications of a financial crisis, I conclude that financial institutions should use scenarios for credible financial crisis threats even if they perceive the probability of such events to be extremely small. papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1278073_code357812.pdf?abstractid=1278073&mirid=3
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