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What is the use of having state-of-the-art market-risk measurement tools if one rogue trader can bankrupt your institution in a matter of weeks? Why bother with the complexities of modelling credit and counterparty risk if a fund manager at one of your foreign subsidiaries can cost you £200 million in cash, and untold millions in tarnished reputation and credit standing? While the leading financial institutions can claim to have half-way scientific ways of measuring, monitoring and providing for credit and market risks, most would agree that they struggle even to define potentially the largest and most pernicious class of risks they face operational risks. |
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