Banks take very large risks by consistently herding in the same perilous directions while believing they are safe and unique. This book presents a risk management framework to understand conformity and deviance within investment banks and other large organizations. It suggests that some groups understand the dynamics of this conformity to their advantage. This requires a deeper understanding of the risk in risk management. Fraudsters can game the system to their advantage legally and illegally; therefore risk managers must understand the interplay of multiple logics in order to govern and manage risk.
Featuring short illustrative cases of massive risk mismanagement, this book walks the reader through four risk management perspectives (economic, institutional, evolutionary and contrarian) that explain why and how economic rationality is overridden by social forces. By understanding conformity and deviance, groups within organizations will be better equipped to manage risk and go against the tides of conformity to their advantage.
@Selected Contents: Introduction 1. The Problem of Conformity in Financial Organizations 2. The Holistic Risk Management Model-HRMM 3. Institutional Risk management Case 1: The Canadian Banking Paradigm 4. Contrarian Risk Management Case 2: The Parmalat Fraud 5. Evolutionary Risk Management Case 3: The National Bank of Australia Fraud 6. Evolutionary Risk Management Case 4: The Gaspesia Private-Public Partnership Fiasco 7. Contrarian Risk Management Case 5: The UBS Sub-Prime Meltdown Case 6: The SocGen Fraud 8. Conclusions Regarding the Risk in Risk Management