Risk Accounting and Risk Management for Accountants

Risk Accounting and Risk Management for Accountants

1st Edition - July 30, 2007

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  • Author: Dimitris Chorafas
  • eBook ISBN: 9780080550466
  • Paperback ISBN: 9780750684224

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Description

Both Accountants and Auditors are confronted daily with challenges associated with the evaluation of credit risk, market risk, and other exposures. The book provides up-to-date information on the most significant developments in risk management policies and practices. Accountants whose work under International Financial Reporting Standards increasingly involves risk control in their job will find this book of practical value with the inclusion of material on "how to" successfully design, implementation and use risk control measures. Designed specifically for accountants the book starts with the fundamental factors underpinning risk: volatility and uncertainty, and then shows how and why accounting, auditing, and risk control correlate. The themes covered in the book include: credit risk, market risk, liquidity risk, investment risk, and event risk.

Key Features

* This practical handbook, complete with case studies is specifically aimed at accountants.
* comprehensive information on how to develop, implement and use a risk management system
* Covers credit risk, market risk, liquidity risk, investment risk, event risk.

Readership

Accountants whose work under International Financial Reporting Standards increasingly involves risk control; Managers and members of risk control operation departments.

Table of Contents

  • PART ONE: RISK AND THE ACCOUNTING PROFESSION

    Chapter 1
    RISK, VOLATILITY, AND UNCERTAINTY
    1. Risk Defined
    2. Kinds and Patterns of Risk
    3. The Role of Judgment and of Analytics
    4. The Science of Risk Management
    5. Exposure to Systemic Factors
    6. A Policy for Risk Protection

    Chapter 2
    RISK MANAGEMENT AND THE ACCOUNTANT
    1. Beyond Classical Accounting
    2. Thinking Out of the Box
    3. Newton4S pRINCIPLES
    4. Pareto’s Law
    5. Using Cash Account for Risk Management
    6. Tracking Creature Accounting Practices

    Chapter 3
    DUTIES AND RESPONSIBILITIES WITH RISK MANAGEMENT
    1. The Accountant’s Mission in Risk Control
    2. Quality of Assets and Quality of Management
    3. Monitoring Assets and Liabilities
    4. Observing Accounting Standards
    5. Establishing a Code of Conduct
    6. Personal Accountability

    Chapter 4
    ACCOUNTING FOR TOTAL EXPOSURE. A CASE STUDY
    1. Total Exposure Defined
    2. Staal Bankiers. Case Study on Total Exposure
    3. The Need for Understanding Where the Risks Are
    4. Dynamic Financial Analysis
    5. Organization for Risk Management
    6. The Management of Change


    PART TWO: RISKS TO BE KEPT UNDER CLOSE WATCH

    Chapter 5
    CREDIT RISK
    1. Credit Risk Defined
    2. Counterparty Risk
    3. Credit Policy
    4. Credit Limits
    5. Credit Risk Management
    6. Credit Risk Mitigation


    Chapter 6
    CASE STUDIES ON LOANS THAT CANNOT BE REPAID
    1. Exposure Due to Sovereign Debt
    2. Sovereign Loans that Go Bust
    3. Risky Investments in Russian Bonds. A Case Study
    4. Credit Risk in the Corporate Sector
    5. Credit Risk with Hedge Funds
    6. Credit Default and Recovery Swaps

    Chapter 7
    MARKET RISK
    1. Market Risk Defined
    2. Trading Risk
    3. Equity Price Risk
    4. Interest Rate Risk
    5. Foreign Exchange Risk
    6. Value at Risk
    7. Beyond Value at Risk

    Chapter 8
    INVESTMENT RISK
    1. Position Risk
    2. Risk Tolerance with Investments
    3. One-Sided Securities Analysis
    4. Case Study with Alstom
    5. Case Study with Asia Pulp & Paper
    6. Insurance Risk. Case Study with Longevity Risk

    Chapter 9
    RISK, REWARD, AND RUIN
    1. Risk Appetite
    2. Liquidity rISK
    3. Event Risk
    4. Legal Risk
    5. Payments Risk
    6. Real-time Risk Reporting


    PART THREE: RISK, REGULATION AND MANAGEMENT CONTROL

    Chapter 10
    BASEL II AND RISK MANAGEMENT
    1. Base II and the Accountant
    2. Competitive Impact of Basel II
    3. Credit Risk Metrics: PD, LGD, EAD
    4. Regulatory Capital and Hybrid Capital
    5. Open Issues with Basel II
    6. Implementation Plan and Simulation Studies

    Chapter 11
    RISK-BASED PRICING
    1. Why Risk-Based Pricing?
    2. Risk Drivers
    3. Risk Factors
    4. Earnings at Risk
    5. Marking to Market
    6. Shortcomings of Valuation Models

    Chapter 12
    A DEVIL’S ADVOCATE IN RISK MANAGEMENT
    1. Role of the Devil’s Advocate
    2. The Mission of Management
    3. Policies for Control of Exposure
    4. Failures in Control of Risk
    5. Learning from the Engineering Sciences
    6. The Importance of Confidence Intervals

    Chapter 13
    BOARD OF DIRECTORS AND THE RISK MANAGER
    1. Risk Control Responsibilities of the Board
    2. Why Board Members Must Understand Risk and Return
    3. Risk Management Is Like Pretrial Preparation
    4. The Monetization of Risk
    5. Client-Oriented Decisions on Exposure
    6. Profile of a Chief Risk Officer

Product details

  • No. of pages: 312
  • Language: English
  • Copyright: © CIMA Publishing 2007
  • Published: July 30, 2007
  • Imprint: CIMA Publishing
  • eBook ISBN: 9780080550466
  • Paperback ISBN: 9780750684224

About the Author

Dimitris Chorafas

Since 1961, Dr Dimitris N. Chorafas has advised financial institutions and industrial corporations in strategic planning, risk management, computers and communications systems, and internal controls. A graduate of the University of California, Los Angeles, the University of Paris, and the Technical University of Athens, Dr Chorafas has been a Fulbright scholar. Financial institutions which have sought his assistance include the Union Bank of Switzerland, Bank Vontobel, CEDEL, the Bank of Scotland, Credit Agricole, Österreichische Länderbank (Bank Austria), First Austrian Bank, Commerzbank, Dresdner Bank, Mid-Med Bank, Demir Bank, Banca Nazionale dell'Agricoltura, Istituto Bancario Italiano, Credito Commerciale and Banca Provinciale Lombarda. Among multinational corporations Dr Chorafas has worked as consultant to top management, are: General Electric-Bull, Univac, Honeywell, Digital Equipment Corp, Olivetti, Nestlé, Omega, Italcementi, Italmobiliare, AEG-Telefunken, Olympia, Osram, Antar, Pechiney, the American Management Association and host of other client firms in Europe and the United States. Dr Chorafas has served on the faculty of the Catholic University of America and as visiting professor at Washington State University, George Washington University, University of Vermont, University of Florida, and Georgia Institute of Technology. Also, the University of Alberta, Ecole d'Etudes Industrielles de l'Université de Genève, and Technical University of Karlsruhe. More than 6,000 banking, industrial and government executives have participated in his seminars in the United States, England, Germany, other European countries, Asia and Latin America.

Affiliations and Expertise

CORPORATE CONSULTANT IN ENGINEERING AND MANAGEMENT, PARIS VISITING PROFESSOR, INFORMATION SCIENCE AND BUSINESS ADMINISTRATION, WASHINGTON STATE UNIVERSITY

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