Fundamentals of Enterprise Risk Management

CHAPTER 5CHALLENGE OF THE 2008 FINANCIAL CRISIS

RISK QUOTE: The greatest lesson in life is to know that even fools are right sometimes.

—WINSTON CHURCHILL, BRITISH STATESMAN

RISK QUOTE: Never pick a fight with an ugly person. They’ve got nothing to lose.

—ROBIN WILLIAMS, COMEDIAN

If the prospect of black swans brings a challenge to ERM, so does the 2008 global financial crisis. Before discussing the challenge, let us review the history of the crisis.

History of the Crisis

The crisis can be traced back to the dot-com frenzy of the late 1990s. The Internet, and the doors it opened, created opportunities to launch businesses that took advantage of new technologies. Changes were envisioned in consumer behavior, marketing, advertising, and communications. ...