Without getting too deep or technical within Risk management practices, I make broad observations on the changes and impact for the Risk world. So what was reset in past one year?
1. Shaking up of the Wall Street/global centers - New York, London, Frankfurt have always been epicenter of global finance. But in many ways 2009 has been humbling for many global giants in these centers to revert to government bailouts - a concept that has always been scoffed at by Wall street traditionally. which is what promted me to look at other financial centers in my blog as leaders in managing risk better - Canada, Spain, Australia, Asia etc.
2. Banking book risk - Back to basics- For too long has the exotic world of trading book been the focus for risk mgmt and maybe rightly so. But it is now also back to basics for banks - Managing Banking book liquidity, credit risk, credit discipline, mortgage basics, loan to value ratios etc.
3. Investment Banking entities - Did 2009 sound the demise of true blue investment banks as separate entities? I do not know the answer. With Goldman Sachs record profits, maybe not.
4. Large scale layoffs impacted Risk Mgmt too - This one is a very strange one. Faced with harsh economic realities, the broad brush approach to cost cutting & layoffs impacted many top notch risk managers. Very surprising considering that this was the time I thought firms would really want to retain their top risk managers. But apparently was not the reality, judging by the considerable time I spent connecting friends in risk community and providing referrals. I will never understand this one.
5. Doing more with less - Related to above point, I also saw Risk Managers (and actually everyone who were left behind post layoffs) under tremendous pressure to do much more with much less. I call out Risk managers especially as post crisis, everyone wanted to demonstrate they were on top of managing risk.
As I blog on this topic, so many thoughts jump at me, I could very easily write a doctoral thesis. But one of my 2010 resolutions is to be short and crisp so this last of my 2009 blogs will bear the brunt of being cut short abruptly. Let us see if i stick to my resolution in 2010.
Wishing you a productive and prosperous happy 2010 year!
