Risk Management and Financial Institutions, + Web Site, 3rd Edition

Preface

Much has happened in financial markets since the second edition of this book was published. We have experienced the worst crisis in more than 70 years. Risk management has assumed more importance than ever before in financial institutions. Market participants are wrestling with initiatives such as Basel III and Dodd–Frank. Liquidity risk and scenario analysis are receiving much more attention.

Risk Management and Financial Institutions has been expanded and updated to reflect these market developments. Like my other popular text Options, Futures, and Other Derivatives, this book is designed to be useful to practicing managers as well as college students. Those studying for GARP and PRMIA qualifications will find the book particularly helpful.

The book is appropriate for elective courses in either risk management or financial institutions. It is not necessary for students to take a course on options and futures markets prior to taking a course based on this book. But if they have taken such a course, some of the material in the first eight chapters does not need to be covered.

The level of mathematical sophistication and the way material is presented has been managed carefully so that the book is accessible to as wide an audience as possible. For example, when covering copulas in Chapter , I present the intuition followed by a detailed numerical example; when covering maximum likelihood methods in Chapter and extreme value theory in Chapter , I provide numerical examples ...