Risk management 2.0: Time for a Recap!
On 9 August 2007 BNP Paribas closed three funds that invested in American mortgages. This event – now ten years ago – was one of the first signs of the impending credit crisis.
Since then the financial industry has been bombarded with a plethora of new legislation and regulations such as AIFMD, Dodd Frank and EMIR in order to make the financial system more robust against a new financial crisis. Central banks adopted an unprecedented monetary policy in order to stimulate the economy, which has brought interest rated down to a worldwide all-time low. Also, concern arise regarding possible creating of bubbles in international stock markets and real estate prices. This fuels a lot of criticism as to the monetary policy of the ECB – economic growth is on the rise, but isn’t this introducing new (system) risks as well? Since the credit crisis, financial institutions have greatly upped their game in risk management. This article provides a recap of these developments and we draw lesson for the future holistic risk management.