Introduction
The RiskMetrics Group is best known for its leadership in the
development of transparent risk estimation methodologies and
easy-to-use software tools. The founders of the Group have long
recognized, however, that there is much more to risk management
that just risk measurement. Indeed, perhaps too much public focus
has been placed on the sophistication and apparent precision of
risk estimation models, and not enough on the more important
managerial and judgmental elements of a strong risk management
framework. These include the clarity of risk policies, the strength
of internal control, the degree of management discipline, the level
of internal risk transparency, and ultimately, the experience and
market knowledge of risk management professionals. No technical
document, however complete and rigorous, can impart that experience
and knowledge.
To contribute to a better understanding of these broader
elements of risk management, and in response to frequent client
inquiries, the experienced professionals of the RiskMetrics Group
have developed this practitioner's oriented guide to Risk
Management. While the details of the subject matter can, at times,
be technical and complex, the essence of the guide is helping
practitioners to get the right information on the right issues to
the right people at the right time. Not with a view to producing a
single right answer, but with a confidence that the right questions
will then be asked, leading to the best informed, experienced
judgments.
As with all other elements of risk management, the
state-of-the-art guide will itself need to be open to continuous
improvement, as new techniques are developed in response to ongoing
innovations in markets and risk products. This first edition of the
guide focuses on market risk analysis and reporting, while also
touching upon closely related issues of counterpart risk reporting
and external risk disclosures.
Stephen G. Thieke
Chairman
RiskMetrics Group
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