Managing Extreme Financial Risk

Foreword

Each of the last three decades has witnessed major financial crises: the Continental Bank and the Black Monday crises of the 1980s, the S&L crisis, the Long-Term Capital Management and the Asian Debt crises of the 1990s, and the bursting of the tech bubble and the 2008 crises of the 2000s. Extreme tail risk played a major role in contributing to the impact of every one of these financial crises.

While each crisis instigated a general sentiment for the need to do something to avoid a repeat of the experience, the crisis of 2008 has been different. Because the depth and breadth of this crisis impacted Wall Street and Main Street globally, this sentiment has been more intense and the discussion about the need to do something in a fundamental ...