Managing Extreme Financial Risk

Epilogue

As it turned out, the bank did not have a business continuity plan for the foreign exchange trading desk at the time of the London terrorist attack in 2005. However, thanks to quick thinking by Stewart, the bank realized no major negative impact from leaving the London trading desk unattended, as all net positions were managed from the Paris and New York desks without any significant problems. Had he not given this direction, the operational interruption at the trading desk’s location—with the marketplace in turmoil—would have cost the bank millions of pounds. This was a wake-up call.

Realizing how close it came to a disaster, the bank overhauled its entire operational risk-management focus following the experience of 7/7. As a result ...