Risk Management Technology in Financial Services

Risk Management Technology in Financial Services

by Dimitris N. Chorafas
Released July 2007
Publisher(s): Butterworth-Heinemann
ISBN: 9780080498096

Read it now on the O’Reilly learning platform with a 10-day free trial.

O’Reilly members get unlimited access to books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.

Start your free trial

Book description

Written for professionals in financial services with responsibility for IT and risk management, Dimitris Chorafas surveys the methodology required and IT systems and structures to support it according to Basel II. The book is consistent with the risk management certification process of GARP, as well as the accounting rules of IFRS, based on research the author conducted with IASB. The author provices an in-depth discussion of the types of risk, stress analysis and the use of scenarios, mathematical models, and IT systems and infrastructure requirements.

* Written in clear, straightforward style for financial industry executives to provide necessary information for risk control decisionmaking
* Consistent with GARP, IFRS and IASB risk management processes and procedures
* Explains stress testing and its place in risk control

Table of contents

  1. Front Cover
  2. Risk Management Technology in Financial Services
  3. Copyright Page
  4. Table of Contents
  5. Foreword
  6. Preface
  7. PART 1 Innovation, risk and return
    1. Chapter 1 Innovation in finance
      1. 1.1 Financial systems and innovation
      2. 1.2 Laboratories for brilliant new ideas
      3. 1.3 Challenging the obvious
      4. 1.4 Strategic choices and unintended consequences
      5. 1.5 Salient problems and management decisions
      6. 1.6 Business leadership
      7. 1.7 Information technology. Does it really matter? (1/2)
      8. 1.7 Information technology. Does it really matter? (2/2)
    2. Chapter 2 What is meant by risk management?
      1. 2.1 Risk and risk factors
      2. 2.2 Risk management
      3. 2.3 Types of risk and their transparency
      4. 2.4 Board of directors and risk organization
      5. 2.5 Internal control. The feedback channel
      6. 2.6 Auditing and risk management
    3. Chapter 3 Complexity of risk control with derivatives
      1. 3.1 Derivatives defined
      2. 3.2 Derivatives exposure
      3. 3.3 $110 trillion in notional principal amount
      4. 3.4 Derivative instruments for credit risk transfer
      5. 3.5 Proactive risk management
      6. 3.6 Levels of inspection, demodulation and stress testing
      7. 3.7 Effective management control starts at the top
    4. Chapter 4 Integrating risk management through an enterprise architecture
      1. 4.1 Choosing a risk-based architecture
      2. 4.2 Funding tactics. An enterprise risk management application
      3. 4.3 Developing an integrated risk management system
      4. 4.4 End-to-end architectural solutions
      5. 4.5 Integrating stress testing into enterprise risk management
      6. 4.6 The importance of the human component should never be underrated
    5. Chapter 5 Case studies on big product problems that went unattended
      1. 5.1 The role of character in the control of risk
      2. 5.2 British Petroleum. Pipeline risk
      3. 5.3 Telecom Italia. Political risk
      4. 5.4 Ford and General Motors. Management risk
      5. 5.5 EADS. Management risk European style
      6. 5.6 The product problems of Long-Term Capital Management
      7. 5.7 Legal risk embedded in financial products
  8. PART 2 Risk control methodology and advanced models
    1. Chapter 6 A methodology for risk management
      1. 6.1 The sense of having a methodology
      2. 6.2 Applying the physicist’s method
      3. 6.3 Dissent, negation and reconstruction
      4. 6.4 Credit risk methodology. A practical example
      5. 6.5 A methodology for integrated risk control
      6. 6.6 Organization and structure for risk management
    2. Chapter 7 The contribution of models to experimentation
      1. 7.1 Introduction
      2. 7.2 The development of mathematical science
      3. 7.3 Abstraction, analysis, signs and rules
      4. 7.4 Notion of a mathematical system
      5. 7.5 Modelling discipline and analytics
      6. 7.6 From classical testing to stress testing
      7. 7.7 Anomalies and asymmetries
    3. Chapter 8 Simulation
      1. 8.1 Introduction
      2. 8.2 The art of simulation
      3. 8.3 The Monte Carlo method
      4. 8.4 Practical applications of Monte Carlo
      5. 8.5 Simulation studies and system engineering
      6. 8.6 Simulation’s deliverables
    4. Chapter 9 Using knowledge engineering for risk control
      1. 9.1 Knowledge engineering, object knowledge and metaknowledge
      2. 9.2 Errors and uncertainty can be both friend and foe
      3. 9.3 Uncertainty modelling and risk control
      4. 9.4 Inference systems, possibility theory and fuzzy engineering
      5. 9.5 Using fuzzy engineering with unexpected risks
      6. 9.6 Algorithmic additivity. A case study on budgeting
    5. Chapter 10 Optimization through genetic algorithms
      1. 10.1 Concepts underpinning genetic algorithms
      2. 10.2 Optimization
      3. 10.3 Stochastic evolutionary processes in GA
      4. 10.4 The importance of fitness functions
      5. 10.5 Processes of becoming and termination
      6. 10.6 Implementing a GA procedure
      7. 10.7 Polyvalent GA applications and their deliverables
    6. Chapter 11 Testing, backtesting, post-mortems and experimental methodology
      1. 11.1 Concepts underpinning a testing methodology
      2. 11.2 The art of model testing. The case of insight
      3. 11.3 Cultural change necessary for backtesting
      4. 11.4 Top management’s responsibility in testing a financial model
      5. 11.5 Post-mortems, experimentation and war games
      6. 11.6 The Committee on the Global Financial System, on stress testing
      7. 11.7 Using experimental design in evaluating test results
      8. 11.8 Benefits to be obtained through experimental design
  9. PART 3 Increasing the effectiveness of information systems support
    1. Chapter 12 Adding value to risk control through IT and organization
      1. 12.1 Strategic planning and information technology
      2. 12.2 Customer-centric solutions are an IT priority
      3. 12.3 Promoting the role of technology in controlling exposure
      4. 12.4 Real-time IT solutions for senior executives
      5. 12.5 A real-time system for risk management
      6. 12.6 Macroengineering. The macroscopic view
    2. Chapter 13 Technology for time management, high frequency financial data and high impact events
      1. 13.1 Knowledge workers, high tech tools and business time
      2. 13.2 High frequency financial data
      3. 13.3 The analysis of high frequency data
      4. 13.4 A research method for high frequency data
      5. 13.5 Accounting for high frequency and low frequency events
      6. 13.6 Prerequisites to a study of high frequency events
    3. Chapter 14 Project management for IT and risk control
      1. 14.1 Planning for project management
      2. 14.2 Principles of sound project management
      3. 14.3 The project’s life cycle
      4. 14.4 Design of a risk control project
      5. 14.5 Potential exposure, actual exposure and future exposure
      6. 14.6 Overdue, overbudgeted, overstressed and over here
    4. Chapter 15 Implementing design reviews
      1. 15.1 Design reviews defined
      2. 15.2 Examples with design reviews of IT projects
      3. 15.3 Defects removal through design reviews
      4. 15.4 Implementing a formal design review
      5. 15.5 Learning from DR experience of other firms
      6. 15.6 Highlights of structured design review meetings
    5. Chapter 16 Quality, reliability and availability
      1. 16.1 Technology risk can cost billions
      2. 16.2 Quality of service
      3. 16.3 Introduction to quality inspection
      4. 16.4 Developing a quality inspection system
      5. 16.5 System reliability
      6. 16.6 Quality of service and reliability correlate
      7. 16.7 Reliability and availability algorithms
    6. Chapter 17 Being in charge of IT costs
      1. 17.1 Effective cost control of information technology
      2. 17.2 Targeting cost-effectiveness
      3. 17.3 Charging for computers and communications services
      4. 17.4 Outsourcing information technology
      5. 17.5 Know what you want in outsourcing
      6. 17.6 The art of negotiating
      7. 17.7 Measuring return on IT investments
    7. Index (1/2)
    8. Index (2/2)

Product information

  • Title: Risk Management Technology in Financial Services
  • Author(s): Dimitris N. Chorafas
  • Release date: July 2007
  • Publisher(s): Butterworth-Heinemann
  • ISBN: 9780080498096