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The Key to Risk Management: Management

Adrian E. Tschoegl, Wharton School of the University of Pennsylvania

Abstract

The Barings, Daiwa Bank and Sumitomo Corp. financial debacles in the mid-1990s suggest that management failures rather than misfortune, errors, or complexity are a major source of the risk of financial debacles. These errors are systematic and are a concommittant of the structure of trading and of human nature. Risk management systems must take these facts into account. Two years after this chapter first appeared in the first edition, John Rusnak, a trader at Allied Irish Bank’s US subsidiary lost US$691m in unauthorized trading.

Suggested Citation

Adrian E. Tschoegl. "The Key to Risk Management: Management" Risk Management: Challenge and Opportunity (2nd ed). Ed. Michael Frenkel, Ulrich Hommel, and Markus Rudolf. Springer-Verlag, 2004.
Available at: http://works.bepress.com/adrian_e_tschoegl/33