If you get the definition wrong, you won't understand the technical expression in either theory or practice.
So, get that right first!
What are the different ways in which banks can reduce and manage different types of risk?
@GARP_Risk @actuarynews @SOActuaries @RiskDotNet
If you get the definition wrong, you won't understand the technical expression in either theory or practice.
So, get that right first!
2. The one side of the coin presents an Opportunity!
2.The another side of the coin presents a Threat!
On which side would you like to do betting?
The interpretation of #risk depends on your insights, your hunch, your gut feelings, your emotions, and last but the not least, your cognitive biases.
1.Predictable Risks (Known Knowns)
2.Less Predictable Risks( Known Unknowns) which are also referred to as the Grey Rhinos.
3.Unpredictable Risks (Unknown Unknowns) which are the Black Swan Risk Events.
•Financial Risks (For e.g. Market Risk, Credit Risk, Liquidity Risk, ALM Risks, Portfolio Management Risks etc)
•Operational Risks (for e.g. Process risks or IT Risks that interface each stage of a transaction)
B. Non-measurable or Non-Quantifiable Risks cannot be hedged with the same level of ease and certainty.
This is where bank risks managers often make a tragic mistake. They often apply statistical risk measurement models to situations where matters are complex and complicated.
Hope this much introduction to the topic helps improve your understanding of #bank risk management.
More from Bank
Last week the @ECB extended its current asset purchase program, now totalling €1.8 tn. Several EU states can borrow at negative interest rates.
10 years ago, the eurozone almost collapsed, a result of a misconstructed currency that was meant to fail from the outset.
A thread👇
1/Before the introduction of the euro, fluctuating exchange rates were seen as threat for economic integration & embarrassment for those who were inflating their currencies faster than others.
The European Monetary System, set up in 1979, was an attempt to stabilise fx rates.
2/The EMS was doomed to fail as members applied different monetary policies while trying to keep their fx rates in a pre-defined corridor.
The German Bundesbank refused to devalue the Mark when other centr. banks inflated their currencies - strengthening the Mark by comparison.
3/Traditionally, Southern EU countries have been more prone to inflation & high debt levels due to a large public sector, strong labour unions & generous pension systems.
Northern countries like Germany & the Netherlands typically had more prudent monetary & fiscal policies.
4/To get rid of the stubbornly conservative Bundesbank & monetise public deficits more easily, Southern countries spearheaded by France pushed for a single currency and used Germany’s desire for reunification in 1989 to make it give up the D-Mark.
10 years ago, the eurozone almost collapsed, a result of a misconstructed currency that was meant to fail from the outset.
A thread👇
1/Before the introduction of the euro, fluctuating exchange rates were seen as threat for economic integration & embarrassment for those who were inflating their currencies faster than others.
The European Monetary System, set up in 1979, was an attempt to stabilise fx rates.
2/The EMS was doomed to fail as members applied different monetary policies while trying to keep their fx rates in a pre-defined corridor.
The German Bundesbank refused to devalue the Mark when other centr. banks inflated their currencies - strengthening the Mark by comparison.
3/Traditionally, Southern EU countries have been more prone to inflation & high debt levels due to a large public sector, strong labour unions & generous pension systems.
Northern countries like Germany & the Netherlands typically had more prudent monetary & fiscal policies.
4/To get rid of the stubbornly conservative Bundesbank & monetise public deficits more easily, Southern countries spearheaded by France pushed for a single currency and used Germany’s desire for reunification in 1989 to make it give up the D-Mark.
Saturday marks the 30th anniversary of German reunification.
— HODLdax (@HODLdax) September 30, 2020
Did you that Germany had to sacrifice its national currency for it?
Let\u2019s look back at the fateful decisions leading to the Euro, a secretive project driven by much political interest and little economic reason.\U0001f447 pic.twitter.com/XcWgBOr29O
