Behavioural Finance Financial Risk Management

Table of Contents

Table of Contents 1 Risk Management Paper ........................................................................................................ 2 1.1 Introduction and interpretation .................................................................................................... 2 1.2 Implementation ............................................................................................................................ 4 1.2.1 Aspects to consider ....................................................................................................................... 4 1.2.2 Implementation Process ............................................................................................................... 8 2 Appendix I – References ....................................................................................................... 10

Date: 24 of May 2012

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Risk Management Paper

1
1.1

Risk Management Paper
Introduction and interpretation

If at the beginning of 2011, a highly respected person advised me that I was going to live through three major earthquakes within a year I would have struggled to believe them and justify arguing with the historical and scientific data, which clearly states the converse is true. Christchurch has no major fault lines and therefore why should we expect to experience an earthquake. As part of a risk manager’s job in a financial institution, they must understand the explicit and implicit effects of rare but plausible events on the position they hold. The simple personal example given above demonstrates the primary challenge that faces risk management