Derivatives: Optimal Risk Control,9780273635710

Derivatives: Optimal Risk Control

by ; ;
Edition: 1st
ISBN13: 9780273635710
ISBN10: 0273635719
Format: Hardcover
Pub. Date: 1999-07-01
Publisher(s): Prentice Hall
List Price: $40.00

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Summary

This is the first book to deliver a total strategy for controlling derivatives risk. The strategy is integrated with the organization's wider systems, strategies and culture. Focusing on managing the future and not merely auditing the past, the book is designed to move risk management frown a dead weight cost to a driver of value. The authors successfully integrate the key disciplines of finance, management and international law in a model for truly optimal risk control across the whole business.

Author Biography

Fraser Malcolm BA, MBA Fraser is a Risk Manager at HSBC Midland in London. As a member of the Market Risk Management group situated on HSBC's trading floor, he is specifically responsible for covering the Fixed Income and Credit Trading areas of the bank's activity, including credit derivatives. Pawan V. Sharma BA (Hons) Pawan is a lawyer whose principle areas of practice are UK and US cross-border corporate financings, mergers and acquisitions and UK financial services and law. Joesph A. Tanega BA Princeton, M. Phil Oxon, Juris Doctor Joseph is Senior Associate Member, St Anthony's College, Oxford University, and a Director of Business Risk Consulting, specializing in Financial Services, Ernst andamp; Young, London.

Table of Contents

Foreword xi
Acknowledgments xiii
Introduction
1(16)
Setting the vision: board of directors
17(16)
Introduction
18(1)
Major responsibilities of the board of directors
19(4)
Formulating the risk strategy
23(1)
Evaluating the use of derivatives
23(2)
Authorized objectives of derivatives use
25(1)
Level of the board of directors' involvement
26(1)
Regular reviews
27(1)
Competence
27(2)
Risk analysis
29(1)
The risk spectrum
29(4)
Accountability of senior management
33(10)
Introduction
34(1)
Senior management responsibilities
35(1)
Formulating risk policy and procedures
36(1)
Remuneration levels
37(2)
Risk limits
39(1)
Counterparty assessment
39(1)
Management review and audit
40(1)
Internal controls and internal audit
40(3)
Principles of financial engineering, risk control and accountability
43(12)
Introduction
44(1)
Extent of financial engineering
45(2)
Innovative security -- truth or myth?
47(1)
Justifying the need for innovation
47(2)
Accountability and optimal risk control
49(6)
Risk-management operations
55(44)
Introduction
56(4)
Increase in complexity of financial markets
60(3)
Optimization of capital
63(1)
Integrating risk management
64(3)
Systemic risk
67(7)
Market risk
74(3)
Credit risk
77(4)
Liquidity risk
81(3)
Cashflow management risk
84(1)
Legal risk
84(4)
Operational risk
88(5)
Value at risk analysis: risk aggregation
93(6)
Organizational change -- impacting the value chain
99(28)
Introduction
100(1)
Organizational considerations
100(2)
Making the structure suit the organization
102(3)
Role of senior level management
105(1)
Information requirements
106(4)
Analytical choices
110(1)
Using a building block approach
111(5)
Technology: problems and opportunities
116(7)
People
123(2)
Timing and phasing implementation of an integrated risk-control project
125(1)
Summary
125(2)
The legal arena
127(56)
Introduction
128(3)
The legal risk dimension
131(2)
Legal capacity
133(2)
Regulation of derivatives activity
135(1)
Duty of care and fiduciary duties
136(3)
Liability in derivative sales
139(1)
Documentation and the use of market standard agreements
140(2)
Netting
142(2)
Insolvency
144(1)
Conflicts of interest -- moving legal counsel in-house
145(2)
International case law and litigation issues
147(30)
Cross-border recognition and enforcement of international judgments
177(1)
Compliance
178(3)
Conclusion
181(2)
Strategic response to future risk-management challenges
183(12)
Introduction
184(1)
The need for continuous management of change
184(1)
Knowledge mining
185(1)
External developments
186(1)
The holistic approach is still the best way to the future
187(1)
Managing change is managing the creative gap
188(1)
Risk drivers
188(6)
Conclusion
194(1)
Appendix 195(4)
References and further reading 199(4)
Legal references 203(2)
Glossary 205(6)
Index 211

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