Sound risk management within financial institutions not only safeguards their own profitability and safety, but also contributes to the stability of the financial industry as a whole. In this article, we would like to give a short introduction of quantitative risk management and explore some interesting research questions within this fascinating field.
Introduction
Risk can be loosely defined as the chance of having an unexpected or negative outcome. Some of the major risks financial institutions face are credit risk (resulting from changes in the credit quality of counterparties or obligors), operational risk (arising from inadequate or failed internal processes, personnel or systems, or from external events) and market risk (due to fluctuations in market prices of assets, liabilities and financial instruments). Moreover, emerging risks such as physical and transition climate risk can also potentially result in large
financial losses. The main components of successful risk management are (I) the identification of the key sources of risk, (II) the quantification of these risks and (III) the management of these risks.
Read the article under Download.
Download
- Quantitative Risk Management .pdf • 0,38 MB
