FRM 9. Learning from Financial Disasters

Learning Objectives

• Analyze the key factors that led to and derive the lessons learned from case studies involving the following risk factors:

1) Interest rate risk, including the 1980s savings and loan crisis in the US.

2) Funding liquidity risk, including Lehman Brothers, Continental Illinois, and Northern Rock.

3) Implementing hedging strategies, including the Metallgesellschaft case.

4) Model risk, including the Niederhoffer case, Long Term Capital Management, and the London Whale case.

5) Rogue trading and misleading reporting, including the Barings case.

6) Financial engineering and complex derivatives, including Bankers Trust, the Orange County case, and Sachsen Landesbank.

7) Reputational risk, including the Volkswagen case.

8) Corporate governance, including the Enron case.

9) Cyber risk, including the SWIFT case.