Where the Industry Is Now: Two years after the Lehman Brothers meltdown, financial firms are just starting to get a handle on the various risk exposures that crippled the world economy. The credit crisis made it painfully apparent that financial institutions’ risk management capabilities were not up to snuff. Although business units calculated risk on a business unit basis, rarely was a complete enterprisewide view of risk available. Without a complete view of risk exposures, firms are vulnerable to severe market shocks and events that shift market dynamics quickly.
By Greg MacSweeney
Published on: January 4, 2011, Wall Street & Technology
Why It’s Important: In order for capital markets firms to finally put the credit crisis in the rear view mirror, they need to have a firm grasp on overall risks – liquidity, counterparty, credit, operational and market — to satisfy regulators and win back investors’ confidence.