Risk Management Context

René Doff

In our daily lives we are surrounded by risks, and this has been the case since the earliest civilisations. Humans are risk managers in the deepest sense of the word. In financial institutions such as banks, insurance companies, pension funds and assets managers, specific risks have received attention after a number of debacles. Moreover, financial risks such as credit or interest rate risk had been managed as a core business, although the early 2000s brought significant change to this area. The financial crisis of 2008 (and subsequent years) and its consequences in the industry have further enhanced the position of risk management. Consequently, risk management has become institutionalised in many ways. We will see in this book how both institutions and regulators have developed their efforts to turn risk management into a focal point. By now, risk management is a key function in many companies.

The domain of risk management has evolved over time, from item-by-item to portfolio-based, from qualitative to quantitative, from operational to strategic. Despite this development path, and despite the (mostly) good intentions of risk management professionals and decision-makers that