Financial Regulatory Forum

Beyond the numbers: do banks manage risk?

By Guest Contributor
June 14, 2012

By Rachel Wolcott

LONDON, June 14 (Thomson Reuters Accelus) - It may seem like a subtle difference, but most of what banks call ‘risk management’ is often more akin to ‘risk measurement’. It is a myth that banks are in possession of fancy gadgetry that allows them to measure risk on a minute-by-minute basis from a specialised risk-control tower and react to it effectively, thus averting catastrophe. Instead, the financial crisis and trading losses, such as JPMorgan’s $2 billion blow-up in May, have shown that by the time banks measure and understand their risks, it is too late. Risk management is not about controlling risk, but about offsetting its impact after the fact.

Firms urged to spend more, complain less to meet compliance challenge

By Guest Contributor
May 16, 2012

By Rachel Wolcott

LONDON/NEW YORK, May 16 (Thomson Reuters Accelus) – Talk to any compliance officer these days and the chances are they will tell a story about too many new rules from too many jurisdictions that are too complicated and labour-intensive and expensive to implement. Each time another missive hits their desks from the Financial Services Authority (FSA), or one of the many other global, European Union or U.S. regulators, bankers, their compliance officers or risk managers, wonder quite how they will be able to manage the implementation process and also, perhaps more importantly how much it will all cost.

JPMorgan, warned earlier over risk governance, highlights oversight challenges

By Guest Contributor
May 15, 2012

By Emmanuel Olaoye, Julie DiMauro and Randall Mikkelsen

NEW YORK, May 15 (Thomson Reuters Accelus) - Corporate executives and boards face big challenges monitoring risk at complex banks like JPMorgan Chase & Co, which was warned by an investor group last year that its board had “serious deficiencies” and was not up to the task.

JPMorgan repeats basic mistakes managing traders, say officials

By Guest Contributor
May 15, 2012

By Rachel Wolcott

LONDON/NEW YORK, May 15 (Thomson Reuters Accelus) – JPMorgan’s Chief Investment Office, which last week was responsible for more than $2 billion in mark-to-market losses, appears to have made some classic mistakes in the risk management of trading desks and the monitoring of traders. Although the CIO losses have not been blamed on a rogue trader, they do have much in common with the incidents at UBS and Société Générale, where single traders lost billions seemingly overnight.  (more…)

JPMorgan may tip Wall Street’s hand on ploys to beat Volcker

By Guest Contributor
May 14, 2012

By Rachel Wolcott

NEW YORK, May 14 (Thomson Reuters Accelus) - JPMorgan Chase & Co’s revelation that it had trading losses of at least $2 billion on a failed hedging strategy may have tipped the hand to one way Wall Street executives plan to get around the Volcker Rule.

U.S. SEC set to monitor private equity funds, official says

By Guest Contributor
May 8, 2012

By Stuart Gittleman

NEW YORK, May 8 (Thomson Reuters Accelus) - Many of the world’s top private equity funds will soon be examined by the U.S. Securities and Exchange Commission, Carlo di Florio, director of OCIE, the SEC’s Office of Compliance Inspections and Examinations, said.

Time to merge risk management and compliance?

By Guest Contributor
April 5, 2012

By Rachel Wolcott

LONDON/NEW YORK, April 5 (Thomson Reuters Accelus) – Regulators’ rising interest in risk management combined with a long trail of big fines for compliance failures has some consultants and industry leaders wondering whether it is time for the two disciplines to come closer together if not merge completely.

Mitigating “Margin Call” risks

By Max Rudolph
October 26, 2011

By Dave Ingram and Max Rudolph
The opinions expressed are their own.

The financial thriller, “Margin Call,” which opened in movie theaters on Friday, tells the story of a firm in the mold of a Bear Stearns or Lehman Brothers at the height of the financial crisis. The firm in the film is akin to real-life firms that seemingly discover too late their reliance on a culture built on growth at any cost and tainted models at the expense of risk management.

Rogue traders will always pose risk to compliance controls, says industry

By Guest Contributor
September 16, 2011

Traders work at their desks in front of the DAX indexBy Martin Coyle and Alex Robson

LONDON/NEW YORK, Sept. 16 (Thomson Reuters Accelus) – The $2 billion rogue trading incident at UBS demonstrates that determined individuals will always be able to circumvent internal systems and controls despite the recent regulatory scrutiny on this area, industry officials said. The case also highlighted the need for banks to think about their reward structures, they added.

SocGen scandal prompts EU bank watchdog crackdown

By Reuters Staff
December 21, 2009

LONDON, Dec 21 (Reuters) – European Union bank supervisors unveiled draft guidelines on Monday to apply lessons from a trading scandal that forced Societe Generale to book billions of euros in losses.