Innovative
new approaches to de-risking and pricing financial products
Every
industry experiences strategic inflection points which throw up both
opportunities as well as threats. The crisis of 2007-2009 was one such
inflection point for the banking and finance industries. A significant part of
the danger arose from the fact that
risk pricing of financial products and the existing risk management techniques
were found desperately wanting and in need of urgent upgrade.
Risk
Pricing is an insightful guide as to how the financial world got risk so
badly wrong — and how it can avoid doing so again. The book explains what the
risk pricing problem for financial products really is.
It deconstructs the failures of the past, and introduces innovative new
approaches to de-risking and pricing financial products for the future:
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Why
the response of governments to the 2007-2009 crisis was seriously flawed
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The
higher order risks the financial industry confronts in the 21st century due
to the effects of volatility and complexity — and what can be done about
it
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The
discipline of risk management from the virtual economy's perspective,
including derivative financial instruments
-
New
methods of dealing with legal risk — particularly rampant in the virtual
economy — overleveraging, the risk of poor supervision and its impact on
pricing financial products
-
How
the top methodology of physicists — quantum electrodynamics (QED) —
offers a potential solution for de-risking financial products.
This
is a path breaking book for finance and banking professionals, academics and
regulators about comprehensive, accurate and dependable methods of measuring and
managing risk through a correct pricing of the exposure embedded in various
financial products.