Mastering Risk Management

SUMMARY

Events, being what has actually happened, are probably the only hard facts we have in risk to make judgements about the future. However, as we have seen, the information we gain from them comes with a number of health warnings. The data will never be complete. As events occur, they inevitably affect behaviour, whether individual or corporate, which means that even if we have captured information comprehensively and accurately, its usefulness degrades over time.

The information gained from events validates and supports risk and control self-assessments, the levels of indicators and scenarios, and is fundamental to assessing capital requirements. But we should be careful that it does not bear too great a load of expectation.