Conclusion
Depending on the bank, the risk management team may be an integral part of the bank’s decision-making process and consider itself part of the business or it may take a more adversarial view and the members may consider themselves police officers. Neither one of these approaches is perfect. When the risk management team is too close to the business, it may not be able to take a step back and make a rational disciplined decision. On the other hand, when its members view their role as one of policing the system, the trading floor would rather go around them than work with them. That is not a particularly healthy relationship either. The ideal relationship is one where the risk management team has enough power within the bank to create ...
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