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January 31, 2008
Call for Papers: The Blind Spots of Risk Management
The Blind Spots of Risk Management - A Special Issue of the Journal of Risk Management in Financial Institutions
Over the past 20 years, the field of financial risk management has grown and advanced at an incredible pace. Oftentimes, an industry or profession that experiences this degree of expansion doesn't have time to reflect on whether the paths it has taken are truly the best paths or whether key elements or key assumptions are relied upon inappropriately or disproportionately to their true value. An insularity or self-assuredness may prevent us from examining other sectors or similar disciplines for better practices.
This special issue of the Journal asks financial risk managers to reflect on the state of the practice and to identify the places in which we might be missing something. The assumption is not that the risk management profession is broken or even badly off course. Rather, the intent of this special issue is to put a focus on new areas that help us strengthen what we have already built and to become aware of our potential blind spots.
Questions that papers might address include:
o Has financial risk management become overly dependent on quantitative measures?
o Is Value at Risk still a relevant tool?
o Have we focused on our communication skills sufficiently?
o Is Value at Risk confused with maximum loss or extreme event loss at senior executive and board levels to the possible detriment of all other risk management activities?
o Is there a mounting fiduciary obligation/liability of risk managers that is not yet widely recognised?
o Do we understand our roles as brokers of information and do we use that broker role inappropriately?
o Does new research in psychology and behavioural finance change the way in which risk should be measured or appreciated?
o Do risk managers consider the value of the customer, or understanding the customers future needs in their work? Should they?
o Is risk management headed down a path similar to that of accounting or will it remain or become more of a strategic role?
o What lessons can be learned by financial risk management is from areas like supply chain risk management, production risk management and project risk management?
o Is the authority influence of the risk management function understood?
o Are there sufficient educational initiatives at our organisations to ensure effective use of risk management services?
The deadline for submission of articles to this special issue is the 8th May 2008. Authors may choose to prepare a short article of 2000-5000 words in length or an opinion piece of about 1500-2000 words in length. Articles may be submitted to sara@hspublications.co.uk. Questions about this issue may be directed to David R. Koenig, guest editor.
Posted by dkoenig at January 31, 2008 02:53 PM
Thanks, David for the info. The topics chosen are very relevant for the present context.I hope we get useful contribution from members.
Regards
Sunando
Posted by: sunando at February 1, 2008 05:50 AM
I've just finished answering the PRMIA ERM questionnaire and was then passed to a site promoting a conference where one big topic was looking at the blind spots of risk management. Well the ERM questions showed lots of blindspots from the author.
There were a number of questions which asked for something like the ranking of the most important risk element, and I couldn't tick "culture". For ERM, one of the main risks to be considered is the lack of a proper risk management culture in the organisation. The PRMIA ERM questionnaire concentrated far too much on the quantitative risks. Let's face it, Societe Generale didn't lose $7bn because somebody mispriced the futures contracts! The sub-prime crisis was aided and abetted by model error, but standard risk management practices should have stopped the model error becoming large enough to cause so much damage. Cultural attributes in firms allowed the risks to become large - nobody wanted to stop the party while everybody was getting the big bonuses. And basic understanding of agency risk at the inception of the mortgages would not have allowed the model error to become too large because the flow of mortgages would have been much lower.
The questionnaire looks like it was put together by someone who has concentrated on the technical aspects of risk management, regulation and reporting but has not examined what enterprise risk management really entails, which is the integration of all these and, on top of all this, ensures, as much as possible, that the risk management process will work! This last point is the most important part of enterprise risk management - the rest is just number crunching.
Posted by: Frank Ashe at February 1, 2008 10:40 PM
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