The year of living riskily

Value-at-risk continued to rise at the world's leading banks in the first quarter of 2008, reflecting increased volatility in the financial markets. Many recorded multiple exceptions, raising further questions about the accuracy of assumptions underpinning VAR measures. By Alexander Campbell, research by Xiao-Long Chen

Volatility has once again become a fact of life for traders after years of stability in the financial markets. The unpredictability has contributed to massive losses on credit and, more recently, equity holdings at banks - with losses likely to continue at some institutions.

The increased volatility is reflected in bank value-at-risk figures, which continued to rise in the first quarter of 2008. But with risk management increasingly under the microscope, there are also increasing concerns about