Three international economists suggest a blueprint for measuring and stress-testing systemic risk in the banking sector, while also addressing shortcomings evident in other proposals.

Three international economists suggest a blueprint for measuring and stress-testing systemic risk in the banking sector, while also addressing shortcomings evident in other proposals.

Three international economists suggest a blueprint for measuring and stress-testing systemic risk in the banking sector, while also addressing shortcomings evident in other proposals.

At nonprofit research organization RTI International, Ward Sax devised an enterprise risk management system that involves key groups of personnel and multiple dashboards.

Aaron Brown talks back to The Quants, Scott Patterson’s book about the mathematics whizzes who “conquered Wall Street and nearly destroyed it,” and says the truth is considerably more nuanced.

If language indicates how we think about the banking business,then it’s time to re-focus the terminology away from earnings and toward risk, says Philip Sherman.

Systematic quantification and monitoring techniques, taking after those of credit risk, would raise the standing of operational risk and improve its integration with other processes, according to Allan Grody.

Linear and compounded returns have short-run similarities,but the distributions diverge over longer time steps. Using them interchangeably, therefore, can have dangerous repercussions, Attilio Meucci explains in Quant Classroom

The G-20 leaders have called for more standardization in international regulation and have designated the Financial Stability Board to be the coordinator. No such global oversight initiative has ever succeeded – but never have world powers come together to deal with a crisis so severe. ALSO: The foresight of Davies and ... click here for more details.

Risk managers should consider alternative approaches, as well as the practical implications of futures contracts that are manipulated, weighted and averaged, writes Peter Went.