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Good Risk Governance Pays

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Category Archives: Model Risk

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Risk Management by Robot

Posted in Compliance, Derivatives, Litigation, Model Risk, Regulation, Risk Management
Risk Magazine editor Lukas Becker has an eye-popping article in the September issue about automated risk management. (See “Robot risk managers excite swap market-makers,” September 1, 2014). Given the constraints on profitability, in part due to the costs of rising regulation, interest rate swap dealers are seeking a way to use algorithms to “monitor multiple… Continue Reading

Automated Investment Management and Fiduciary Liability

Posted in Broker Dealers, Compliance, ERISA, Investment Management, Litigation, Model Risk, Regulation, Venture Capital
As I read about the pros and cons of providing automated investment advice, I am reminded of one of my former financial modeling students. Knee deep in math and not very happy about the hard work ahead, he felt strongly that hiring someone else to do the “grunt” work would leave him free to tackle more… Continue Reading

Risk by Any Other Name…

Posted in Disclosure and Transparency, Investment Management, Model Risk, Risk Management
Reading “Like, Degrading the Language? No Way” (New York Times, April 6, 2014) struck a nerve. The author of this opinion piece, Associate Professor of English John McWhorter at Columbia University asserts that the unfortunately popular (my view) use of the word like – “used so prolifically by people under a certain age” – is a… Continue Reading

SEC Examination Priorities For 2014

Posted in Broker Dealers, Compliance, Leverage, Model Risk, Regulation, Risk Management, Valuation
In case you missed it, the U.S. Securities and Exchange Commision (“SEC”) recently published its “Examination Priorities for 2014.” According to this January 9, 2014 document, important priorities include, but are not limited to, the following: Fraud detection and prevention analysis to entail the use of “quantitative and qualitative tools and techniques to seek to… Continue Reading

Risk Management Survey Says More Work Is Needed

Posted in Compliance, Derivatives, Disclosure and Transparency, Financial Reporting, Model Risk, Risk Management
After the last few years, it seemed that risk managers were finally getting their due respect. Alas, a new survey suggests that more work remains to be done. According to “Too good to fail? New challenges for risk management in financial services” by Rob Mitchell with the Economist Intelligence Unit, “Inculcating and embedding a stronger… Continue Reading

ERISA Fiduciaries Under Attack: Key Litigation and Regulatory Developments

Posted in Derivatives, ERISA, Fiduciary Liability, Hedge Fund, Leverage, Litigation, Model Risk
Courtesy of Strafford Publications, Dr. Susan Mangiero spoke on the topic of ERISA investment fiduciary pain points and the role of service providers. She was joined by esteemed colleagues Andrew L. Oringer (Partner, Ropes & Gray) and Christine A. Dart (Vice President, Chubb & Son) in a lively and informative debate about current ERISA litigation… Continue Reading

Model Risk and A $242 Million Outlay

Posted in Model Risk, Risk Management, Valuation
In reading the published accounts of the U.S. Securities and Exchange Commission (“SEC”) settlement with the AXA Rosenberg Group and various related entities, I’m reminded of many articles I’ve written that warn about the limitations of models and the critical need for ongoing tests and oversight of said models. According to the document published today… Continue Reading