Mastering Risk Management

BASIC PRINCIPLES

What does this number mean? Why is it at that level?

These key questions often arise from reading a risk report. Most risk reports are seen on a monthly basis and there can be an assumption that the reader will remember the values given in the previous month’s report. That is unlikely. The report will almost certainly be one of many that the reader reviews. Context must therefore be given to a particular number or information it contains, either from other numbers in the same report or from a comparison with the previous period, expected range or agreed appetite.

Should I do something about it?

A good report should not simply give values but should guide the reader as to whether or not action is required. Indeed, if a report ...