A challenge to the conventional wisdom surrounding financial risk, providing insight into why easy solutions to control the financial system are doomed to fail
Finance plays a key role in the prosperity of the modern world, but it also brings grave dangers. We seek to manage those threats with a vast array of sophisticated mathematical tools and techniques of financial risk management. Too often, though, we fail to address the greatest risk—the peril posed by our own behavior.
Jón Daníelsson argues that critical risk is generated from within, through the interactions of individuals and perpetuated by their beliefs, objectives, abilities, and prejudices. He asserts that the widespread belief that risk originates outside the financial system frustrates our ability to measure and manage it, and the likely consequences of new regulations will help alleviate small-scale risks but, perversely, encourage excessive risk taking. Daníelsson uses lessons from past and recent crises to show that diversity is the best way to safeguard our financial system.
ISBN-13: 9780300234817
Media Type: Hardcover
Publisher: Yale University Press
Publication Date: 06-28-2022
Pages: 288
Product Dimensions: 6.12(w) x 9.25(h) x (d)
Jón Daníelsson is a professor of finance and the director of the Systemic Risk Centre at the London School of Economics. He is the author of Financial Risk Forecasting and Global Financial Systems: Stability and Risk.
Table of Contents
Acknowledgments vii
1 Riding the Tiger 1
2 Systemic Risk 6
3 Groundhog Day 26
4 The Risk Panopticon 51
5 The Myth of the Riskometer 72
6 Ideas Matter: Risk and Uncertainty 94
7 Endogenous Risk 109
8 If You Can't Take the Risk, Change Riskometers 128
9 The Goldilocks Challenge 147
10 The Risk Theater 168
11 The Uniformity, Efficiency, and Stability Trilemma 189
12 All about BoB: Robots and the Future of Risk 205
13 The Path Not to Take 223
14 What to Do? 240
Notes 255
Bibliography 259
Index 267
Show More
