How the Trading Floor Really Works

Conclusion

Risks within a bank are complex because of how large and global many banks are today. They operate across products, across asset classes and across regions in very large size. The key risks on trading floors are primarily market risk and credit risk. These are risks for which there is generally market standard methodology to assess and identify them. However, the assumptions that go into the models are not always that straightforward. While the assessment of the risk may be complex or controversial because of the assumptions, the more difficult task is the management of that risk: this means the decision-making around whether the risk is sensible risk to have in the context of the business the bank does and at which point it is time ...