Crisis prompts greater focus on risk management

Risk-management departments at major financial institutions are forcing heads of equities to think about extreme risk events in the wake of the financial crisis. "The industry took a far too optimistic view of liquidity and the level of risk associated with holding and trading illiquid assets over the past five years," said Emad Morrar, head of liquid markets for Europe, the Middle East and Africa at Nomura. "We were too focused on theoretical models, rather than taking a step back and asking, 'Can I really liquidate my position at the price that my model is telling me? Is that realistic?' "

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