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Rogues of Wall Street

Book Description

Reduce or prevent risk failure losses with new and emerging technologies

Rogues of Wall Street analyzes the recent risk failures and errors that have overwhelmed Wall Street for the past decade. Written by a veteran risk, compliance, and governance specialist, this book helps bank leaders and consultants identify the tools they need to effectively manage operational risk. Citing different types of risk events such as: Rogue and Insider Trading, cyber security, AML, the Mortgage Crisis, and other major events, chapters in the first half of the book detail each operational risk type along with its causative and contributing factors. The second half of the book takes an overarching approach to the tools and solutions available to financial institutions to manage such events in the future. From technology, to culture, to governance, and more, this book does more than simply identify the problem—it provides real-world solutions with actionable insight.

Expert discussion identifies the tools financial institutions have at their disposal, and how these tools can be leveraged to create an environment in which catastrophic events are prevented or mitigated. In-depth insight from an industry specialist provides thought-provoking guidance for leaders seeking more effective risk management, and specifically addresses how to:

  • Analyze major operational risk incidents and their underlying causes
  • Investigate the tools that allow organizations to prevent and mitigate catastrophic events
  • Learn how culture and governance can be optimized to support effective risk management
  • Identify ways in which cognitive technologies could help your firm avoid losses

Cognitive technologies have the potential to revolutionize the way business is done; eliminating the speed/cost/quality trade-off, these new and emerging tools are heralding the next leap in the evolution of risk management. Rogues of Wall Street shows you how bring these tools into your organization, and how they can contribute to your financial success.

Table of Contents

  1. Cover
  2. Title Page
  3. Copyright
  4. Dedication
  5. Introduction: A Risky Business
    1. Notes
  6. Acknowledgments
  7. About the Author
  8. Chapter 1: The Historical Context
    1. Notes
  9. Chapter 2: The Rogue Trader
    1. Who Is the Rogue Trader?
    2. The Crime of Rogue Trading
    3. Tools of the Rogue Trader's Trade
    4. How Rogue Traders Succeed
    5. Can the Rogue Trader Be Stopped?
    6. Notes
  10. Chapter 3: Genius Traders: Who They Are and How to Catch Them
    1. Characteristics of the Genius Trader
    2. How to Manage Genius Risk
    3. Notes
  11. Chapter 4: Insider Trading
    1. What Is Insider Trading
    2. The Industry of Insider Trading
    3. Trading Floors and Chinese Walls
    4. Raising the Bar
    5. Notes
  12. Chapter 5: Price Manipulation Risk: The Big Unknown
    1. Price Manipulation
    2. Earnings Restatements
    3. LIBOR
    4. Foreign Exchange
    5. Collusion
    6. Emphasis on Surveillance
    7. Notes
  13. Chapter 6: The Mortgage Mess
    1. Mortgage Securitization
    2. Indicators of Risk
    3. The Aftermath
    4. Notes
  14. Chapter 7: Ponzi Schemes and Snake Oil Salesmen
    1. Ponzi Schemes
    2. Regulators and Fraud
    3. Bribery and Corruption
    4. Notes
  15. Chapter 8: Rogue Computer
    1. History of Technology in Public Markets and Increasing Risk
    2. Flash Crash 2010
    3. Knight Capital 2012
    4. Facebook and BATS
    5. How Problems Occur
    6. Key Controls
    7. Notes
  16. Chapter 9: Funding the Bad Guys—Winning the AML Battle
    1. Modern Practices of Money Launderers and Undetected Cash Movers
    2. Money Launderers and Terrorists
    3. Legislature and Regulations
    4. Impact of Regulations
    5. An Effective AML Program
    6. Mitigating the Risk
    7. Notes
  17. Chapter 10: Litigation and Big Data Risk
    1. What Is the Risk?
    2. Systemic Risks from Big Data
    3. Notes
  18. Chapter 11: Twitter Risk and Fake News Risk
    1. Note
  19. Chapter 12: Spreadsheet Risk: Should We Ban Excel?
    1. Mitigating the Risk
    2. Notes
  20. Chapter 13: Acts of God Risk
    1. Note
  21. Chapter 14: Cybersecurity—The Threat from Outside and Inside the Firewall
    1. External Cyberthreats
    2. Insider Threats
    3. Taking Cybersecurity Controls to the Next Level
    4. Notes
  22. Chapter 15: Turning the Tables on Risk
  23. Chapter 16: Building the Right Culture: Values, Organization, and Culture
    1. Seeing the Value of Your Contribution
    2. Fixing the Organization
    3. Breaking Down Organizational Barriers to Change
    4. An Ethical Culture
    5. Notes
  24. Chapter 17: The 360‐Degree Risk Management Function
    1. Tone from the Top: Assess Risks as Well as Goals
    2. Connecting Risk to the Rest of the Firm
    3. Connecting Risk Managers to Each Other
    4. Hooking up the Operational Risk Department
    5. Notes
  25. Chapter 18: What We Talk about When We Talk about Risk
    1. Business Goals
    2. Business Process
    3. Risk Dictionary
    4. Top Risk Identification
    5. Control Dictionary
    6. Finally…
    7. Notes
  26. Chapter 19: The Future Is Unknowable, the Present Burdensome; Only the Past Can Be Understood
    1. Internal Loss Incidents
    2. External Incidents
    3. Scenario Planning
    4. Risk and Control Assessment
    5. Notes
  27. Chapter 20: The New Tools of the Trade
    1. Putting People to Good Use and Avoiding Rabbit Holes
    2. Putting Data to Good Use
    3. Putting Psychological Insight to Use
    4. Notes
  28. Chapter 21: Cognitive Technologies
    1. Trade Surveillance
    2. Regulatory Compliance Management
    3. Taking Proactive Steps
    4. Notes
  29. Chapter 22: The Role of Government and Regulators in Managing Risk
    1. Regulating the Markets: The SEC and the CFTC
    2. Regulating Risk Taking: The Federal Reserve and the Treasury
    3. Regulatory Reform since the 2008 Financial Crisis
    4. Notes
  30. Chapter 23: Case Studies and Guiding Principles in Planning for Disaster
    1. First Guiding Principle: Develop Multiple Scenarios and Optionality
    2. Second Guiding Principle: Develop Strategies to Match the Scenarios
    3. Third Guiding Principle: Understand How the World Is Changing
    4. Fourth Guiding Principle: Build Political Will to Resource the Chosen Strategy
    5. Notes
  31. Chapter 24: The Risk Management Society and Its Friends
    1. Attribute 1: A Shared Passion
    2. Attribute 2: Shared Ethical Values
    3. Attribute 3: Willingness to Debate Issues—The Open Society
    4. Attribute 4: Education
    5. Attribute 5: Interconnectedness
    6. Notes
  32. Chapter 25: Conclusion: Seven Traits for Successfully Managing Cognitive Risk
    1. Mature Governance Structure
    2. Top‐to‐Bottom Risk Culture
    3. An Open Mind about Regulation
    4. Understanding the Firm's Unique Risk Profile
    5. Not Just Throwing Money at the Problem
    6. Innovation and Technology
    7. Constant Self‐Analysis
  33. Index
  34. End User License Agreement