Tighter regulation in one bit of finance may push excessive risk-taking into unregulated areas.
One company that has considered a merger in the past year is the Trinsum Group, which is itself the product of a union in early 2007 between Marakon, a strategy consultancy, and Integrated Finance, a financial- and risk-consulting company that includes Robert Merton, a Nobel prize-winning economist, among its founders.
If you are one of those who rails against the short-termism and excessive risk-taking of some banks and finance businesses, you might note that a public sector financial institution, the Debt Management Office, has taken a reassuringly long-term approach to managing the UK government's debts - and without its prudence, we might all be in Queer Street or Skid Row by now.
Banks and rating agencies were gripped by the pretence that all finance can be calculated by risk-modelling eggheads.
Figures from the central bank show that credit lines to finance trade, normally considered low-risk, are running at about half the level of mid-September.
In a market-based system of finance, the risk of losing your money is not an avoidable nuisance but a fundamental requirement.
We believe that the long-term outperformance of low-risk portfolios is perhaps the greatest anomaly in finance.
Firms and investors in developing countries also need the risk-sharing derivatives developed by Anglo-Saxon finance.
Tough conditions were placed on the 58 suspended finance companies wanting to reopen, including capital as a percentage of risk-adjusted assets of 12% to 15%.
According to a survey of industry practices published by the Institute of International Finance (IIF) in March, many banks still fail to use risk-adjusted measures either to calculate the size of their bonus pool or to allocate it.
System risk is a concern of regulators but not necessary of C-level finance executives.
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As the Bank of France pointed out, the bonus plan complies with rules introduced in February at the behest of Christine Lagarde, the finance minister, to ensure that the structure of bankers' compensation does not encourage excessive risk-taking.
For me, the other striking thing that Mr Diamond said was that the eurozone would continue to be prone to "chronic event risk" in respect of the ability to finance themselves of the weaker peripheral economies - which many now see as including Italy and Spain, along with Greece, Ireland and Portugal.
The notion that owning high-risk stocks will yield high returns over the long haul is a bedrock of modern finance.
In particular, I had always mistrusted the Value-at-Risk metric and its offshoots that had been crammed down my throat as an undergraduate finance student.
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Another risk lies in the fact that America depends on China to help finance its budget and current-account deficits.
Creating a government agency or corporation to oversee housing finance might minimize risk taking if Fannie and Freddie dropped their mortgage portfolios and instead focused only on issuing mortgage-backed securities.
Mr. Gaffney warned each of the addressee firms that they may be exposed to reputational risk and price risk if they are invested in or have prime broker relationships with banks engaged in Shariah-Compliant Finance.
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