A Tradeoff between Risks and Rewards
Poor risk management：
management might leave gaps in risk measurement.
Risk management failure can be exacerbate的 by the compensation Incentive schemes.
Trading institutions may manipulate revenues.
Poor risk measurement techniques ： distorted risk.
industry regulators can be drawn int the deception.
The Danger of Names
1.The classification of risk creates the potential formissed risks and gaps in responsibilities.
2.The management of risk within silos is efficient but won't together efficiently to manage the risks as a whole.
3.Enterprise-wide risk management(ERM)breaks through risk management silos.
Numbers are Dangerous too!!!
*Only some kinds of numbers are truly comparable.
*Introducing sophisticated models has its own dangers.
*A trader might falsify transaction details.
*Risk report readers seldom ask tough questions.
*All statistical estimation is subject to estimation errors and economic environment changes.
*Human psychology
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