The risk process commonly used in the corporate world to deal with risks may be suitable for non-catastrophic events, but not for extreme events. By analyzing a series of past disasters and the relevant 'lessons learned', this books proposes a series of prescriptive measures to cope with future disasters.
Risk and Financial Catastrophe presents an in-depth discussion of the nature and consequences of financial disasters and the pragmatic solutions that must be considered in order to cope with such crises in the future. This highly topical book tackles technical issues in a readable, non-mathematical way and presents the subject in practical light with the use of eight case studies of market-wide, international catastrophes. The book is divided into three parts: Part I, The Nature of Catastrophe, sets the stage by presenting a taxonomy of risk and placing non-catastrophic and catastrophic exposures into an overall framework. This section also considers the unique properties of catastrophe, exploring both natural and man-made events in relation to frequency, severity and financial impact, as well as the specific nature and formation of financial disasters and how individual institutions, and the financial system at large, respond to such crises. Part II, The Risk Framework, presents the processes commonly used in the corporate world to deal with risks, noting how such processes may be suitable for non-catastrophic events, but not for extreme events.; This section also considers a series of techniques, tools and models that are available to help quantify catastrophic risk, illustrating their use in a practical sense while also analyzing their limitations. Part III, Practical Management, moves into the practical dimension of the topic by analyzing a series of past disasters (including the emerging debt crisis of the 1980s, the October 1987 Crash, the Japanese banking crisis of the 1990s, the Southeast Asian Crisis of 1997, the Russia/LTCM dislocation of 1998 and the Credit Crisis which began in 2007), considering the relevant 'lessons learned,' and then proposing a series of prescriptive measures to cope with future disasters.
PART I: THE NATURE OF CATASTROPHE Taxonomy of Risk Catastrophes Financial Catastrophe PART II: THE RISK FRAMEWORK The Risk Management Process Models, Metrics and Limitations PART III: PRACTICAL MANAGEMENT Past Catastrophes Lessons Learned and Prescriptive Measures The Future of Risk Management Notes Selected References Index