Jump to ContentJump to Main Navigation
Why Some Firms Thrive While Others FailGovernance and Management Lessons from the Crisis$
Users without a subscription are not able to see the full content.

Thomas H. Stanton

Print publication date: 2012

Print ISBN-13: 9780199915996

Published to Oxford Scholarship Online: September 2012

DOI: 10.1093/acprof:oso/9780199915996.001.0001

Show Summary Details
Page of

PRINTED FROM OXFORD SCHOLARSHIP ONLINE (www.oxfordscholarship.com). (c) Copyright Oxford University Press, 2017. All Rights Reserved. Under the terms of the licence agreement, an individual user may print out a PDF of a single chapter of a monograph in OSO for personal use (for details see http://www.oxfordscholarship.com/page/privacy-policy).date: 18 December 2017

Risk Management and the Financial Crisis

Risk Management and the Financial Crisis

Chapter:
(p.95) 5 Risk Management and the Financial Crisis
Source:
Why Some Firms Thrive While Others Fail
Author(s):

Thomas H. Stanton

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780199915996.003.0005

Chapter 5 looks at risk management and the financial crisis. Risk management involves balancing risk and returns so that a firm enhances value to itself and its shareholders. The organizational structure of risk management involves a choice between keeping risk management separate from revenue-producing activities or embedding risk managers in revenue producing units. These choices are not nearly as important as having a culture in the firm that respectfully takes risk perspectives into account. Risk officers need support from the CEO and the board. Otherwise they cannot do their jobs in the face of pressures for the company to reap what appear to be easy profits. Judgment is critical. Economist Frank Knight long ago distinguished risk, which can be quantified, from uncertainty, which requires judgment. Successful firms used judgment to add more protection than quantitative modelling would have suggested by itself.

Keywords:   risk, uncertainty, judgment, financial modelling, risk officers, returns

Oxford Scholarship Online requires a subscription or purchase to access the full text of books within the service. Public users can however freely search the site and view the abstracts and keywords for each book and chapter.

Please, subscribe or login to access full text content.

If you think you should have access to this title, please contact your librarian.

To troubleshoot, please check our FAQs , and if you can't find the answer there, please contact us .