Chapter 13
Conclusion
With this book we have taken a tour through risk management in its majesty. We have covered much, but there is also much that we have not covered. Risk, management, and financial markets are all evolving. That is good but provides challenges for any manager who takes his responsibilities seriously.
In closing, I simply reiterate what I see as the central, in fact, the only, important principle of risk management: Risk management is managing risk. This sounds simple but it is not. To properly manage risk, we need to understand and use all the tools covered in this book, and even then we will not be able to foretell the future and will have to do the best we can in an uncertain world.
Risk management is the core activity of a financial firm. It is the art of using what we learn from the past to mitigate misfortune and exploit future opportunities. It is about making the tactical and strategic decisions to control risks where we can and to exploit those opportunities that can be exploited. It is about managing people and processes, about setting incentives and implementing good governance. Risk management is about much more than numbers. “It's not the figures themselves, it's what you do with them that matters,” as Lamia Gurdleneck says.1
Risk measurement and quantitative tools are critical aids for supporting risk management, but quantitative tools do not manage risk any more than an auditor's quarterly report manages the firm's profitability. In the end, quantitative ...
