Risk Management Challenges after the Financial Crisis. (8th October 2013)

• Record Type: Journal Article
• Authors: Mertzanis, Charilaos
• Is Part Of: Economic notes. Volume 42:Number 3(2013:Nov.)
• Page Start: 285
• Page End: 320
• Publication Date: 2013-10-08
• Subjects: Economics -- Periodicals; 330.9
• DOI: 10.1111/j.1468-0300.2013.12011.x
• Languages: English
• ISSNs: 0391-5026

Abstract

<abstract abstract-type="main"> <title> <x xml:space="preserve">Abstract</x> </title> <sec id="ecno12011-sec-0001" sec-type="section"> <p>The recent financial crisis highlighted the need for risk measures that deal adequately with extreme events. In the modern complex financial world, risk measures can only be effective if they take into consideration the endogeneity of risk. Endogenous risk is an inherent characteristic of the modern financial system. The crisis has also highlighted the considerable changes in investors' attitude towards risk under changing market conditions. These developments have cast doubt on the role of traditional elements of risk management theory: prices, probabilities and preferences. The paper presents a non‐technical summary of the main challenges for effective risk management in the modern complex financial world.</p> </sec> </abstract>