Risk Management Policy
The final chapter of this book is concerned with risk management policy, which links a firm's investment strategy with its organizational setup and its systems and procedures. Essentially, risk management policy sets the framework for a financial institution to coordinate and execute its activities and hence plays a key role in the decision-making process. There is a growing awareness that failures and near-misses within financial institutions have been caused, or at least perpetuated, by deficiencies in risk management systems and policies. Against this background, the European Securities and Markets Authority (ESMA, 2011) has recently identified three areas of particular importance for the management of financial risks:
In many financial organizations, the development and implementation of an effective risk management policy has therefore been given high priority. Although ...