Case Studies

This option introduces you, by way of case studies, to the sources, types and control of financial risk. The Barings and Sumitomo case studies illustrate the importance of controlling operational risks while the LTCM case highlights the dangers of concentration/ counterparty risk. The systemic risk implications of the Asian financial crisis of 1997 are also presented here. These documents can stand alone, but they are intended to whet your appetite to find out more about financial risks and the latest thinking on how these risks should be managed.

Not Just One Man - Barings
The chain of events which led to the collapse of Barings, Britain's oldest merchant bank, is a demonstration of how not to manage a derivatives operation... written by Lillian Chew

Analysing Sumitomo
Delivered at the SCFOA General Meeting at Burgenstock by Mary Kooi. (Published in Swiss Commodities, November 1996)

The Causes of the Asian Financial and Economic Crisis
Extracts from an interim report by the Emerging Markets Committee, IOSCO titled, " Causes, Effects and Regulatory Implications of the Financial and Economic Turbulence in Emerging Markets."

Lessons From The Collapse Of Hedge Fund, Long-Term Capital Management (by David Shirreff)
Long-Term Capital Management Despite having two Nobel Prize laureates and the brainiest traders on Wall Street, hedge-fund Long-Term Capital Management almost collapsed. This case study analyses where they went wrong, how they assumed unlimited credit facilities and the resultant hyper-leverage of the fund. It also touches on some of the credit risk lessons the world's banks and regulators have gleaned from its near collapse.

13 Questions on Risk Management
This Question & Answer package has been specifically designed as a straightforward 13 point checklist for shareholders. It is within every shareholder's interest to question their company's board and senior management on how the firm manages and controls risk. Users who want to know more about the issues raised in each question can use the hyperlink to key risk concepts.