Managing Extreme Financial Risk

Strategies and Tactics for Going Concerns


  • Karamjeet Paul, Founder, Strategic Exposure Group

Managing Extreme Financial Risk addresses the need for better management strategies in light of increased market risk and volatility in financial institutions' revenue models.  Top officials from the financial and regulatory industries point to real corporate issues, showing how institutions react to financial crises. From first-hand experiences, they explain how effective sustainability management does not just prevent being blindsided; it also leads to proactive solutions that enhance an institution's strength to weather a sudden financial crisis, add significant shareholder value, and reduce systemic risk. Readable, coherent, and logical, Managing Extreme Financial Risk shows how extreme risk needs to be handled when the cost of being wrong means the difference between life and death of the institution.
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Executives, board members, and regulators as well as undergraduate and graduate students working in all subdisciplines of finance, especially risk management and financial institution management.


Book information

  • Published: September 2013
  • ISBN: 978-0-12-417221-0


"When it comes to the tail risk, Karamjeet Paul encourages senior management to shelve quantitative models and address capital sustainability instead. The book has implications for market participants who work with such unknowns as  99.5%-iles of a deal or portfolio profit and loss distributions."  -Sergei Esipov, Quant-Isle

"Karamjeet Paul makes a convincing case for addressing the fundamental issue of 'tail risk' to protect financial institutions and the financial system. Despite all the talk to 'do something' following the 2008 crisis, the impact of tail risk has not been addressed.  Managing Extreme Financial Risk should be required reading for regulators, board members, CEOs and CFOs of large financial institutions." --Vashishta Bhaskar, Duquesne University

Table of Contents

      1. Sustainability Management is Critical
      2. Tail Risk As The Culprit
      3. Need For A Distinct Focus on Tail Risk
      4. Sole Focus on Risk Management Can Be Dangerous
      5. Usefulness and Limits of Quant Models
      6. If You Can’t Measure It, You Can’t Manage It
      7. Simplicity to Counter Complexity of Revenue Models
      8. A New Measure For Effective Sustainability Management
      9. Continuous Readiness is Critical
      10. Effective Sustainability Management
      11. Paradoxical Capital Problem
      12. Capital As The Last Defense vs. the First Defense
      13. Tail Risk, Regulatory Supervision & Systemic Risk

      14. Convergence of Regulatory Objectives and Institutional Interests

      15. Telling Your Story Effectively To Alleviate Marketplace Anxiety
      16. Critical Factors In Dealing With Extreme Financial Crises

      17. From The Bane of Revenue Model To A Competitive Advantage

      18. Adapting Organizations To Effective Sustainability Management