Thursday, March 26, 2009

The Rise of Risk Management

I had previously teased by calling Risk Managers "the boys that cried wolf" in a blog post written one month today. However, we are all aware of risk in the market and strive to understand it. Certainly, there should be no more of this (courtesy of today's

Having said that, there are some new developments happening in the world of risk management relating to modeling, policy and transparency. What will be interesting to watch is exactly what form this will take when it manifests.

There is a lot of work that needs to be done on risk management, credit ratings etc. Clearly the "old systems" won't work (people have lost a lot of faith already). Although there are some fundamental hopes for recovery (economic things like GDP and unemployment), I think there are some bigger issues before the financial markets take their next evolutionary step and before we start to see real gains.

What does that translate into? Government or private sector regulation that makes sense (and I would hope that the investing public would have learned from our collective mistakes and not accept a superficial band aid solution over the surgery that's needed). Until that happens, I don't think we'll really see a flood of money back into the market.

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