Credit Risk

The credit crisis of 2007 has market participants worldwide paying more attention than ever to the ..... management of their risk exposures.

No investment, trading counterparty or client is completely ..... and free of risk, says Frank Reiss of Euroclear.

This sentiment has ..... to the short-term cash markets as well, with treasury desks acutely aware that the reluctance of certain banks to lend freely in the inter-bank market is creating caution and apprehension among the most seasoned professionals.

Risk-taking brings profit, but good risk management allow firms to keep it; for example, the growing over-the-counter (OTC) derivatives market involves lots of risk and provides ..... rewards for those that navigate well.

The three foremost derivatives classes - interest rate swaps, equity and credit derivatives - have soared to 327 trillion outstanding according to International Swaps and Derivatives Association figures; however, this ..... growth has not been matched by adequate attention to operational risks.

In fact, the rise in OTC derivatives trading and the lack of post-trade standardisation and automation is a cause for serious concern; today, firms ..... with piles of unprocessed transactions, leading to severe breaks in reconciliation, and problems with collateral and exposure management further downstream.

Adding to this operational conundrum is the November 2007 Basel II deadline - guidelines that set out to ..... operational risk from credit risk.

As from 1 November, firms will be required by law to have rigorous risk and capital management measures in place, designed to ensure that banks hold capital reserves ..... to the risk exposures arising from their lending and investment practices.

Today's changing market dynamics and the vast sums at ..... have rocked the market into greater risk awareness.

And as the market knows only too well, dynamics that are not managed can ..... untold financial risks.