Dr. John Pattison

AS the credit crisis matured in such a costly fashion the challenge for corporate risk management, risk managers and financial supervisors became clear.

Boards of directors, management and the public at large need to be reassured as to the judgment, competence and overall ability to respond to complex exposures that are driven by market, credit and operational risks.

This challenge was not only driven by market events, but by the growth in the complexity of financial products and the growing reliance on mathematical models to measure and analyse exposures and to report to management and boards. The business requirement is to begin with and refine basic risk management skills at the transactional level, be they credit or market-type risks. Then risk managers must utilise where required the appropriate and tested analytics, from modelling and mathematical methods, to balance
and refine their insights with judgment and experience.

The ability to integrate such information must then find its way into board and management reporting. For regulators, supervisors and the public sector generally, assesssing the competence of individual financial firms, testing methods and models, and looking for aggregate economic impacts across the regulated (and sometimes unregulated) sector, including stress tests and cyclical effects is an extension of this process.

For international bodies such as the Bank for International Settlements, the International Monetary Fund or World Bank, integrating national risk management information for systemic risks is essential.Thus risk professionals have their challenges for which this journal hopes to make an essential and ongoing contribution.