London, September 2010

A risk governance model

Until recently, financial regulators worldwide operated largely under the assumption that the internal risk management processes at most financial and trading firms was effective and there was little need for micro-management.

In this article, we argue that for the risk management process to be effective, a firm needs to have an explicit ‘risk governance’ framework in place that integrates risk management into the governance structure of the firms, and coherently links the roles and responsibilities of the risk group with the overall business strategy of the firm.

By Carlos Blanco & José Ramón Aragonés

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