Did risk management tools fail to deliver in the face of the credit crisis?
DST Global Solutions: Actively managing an organisations risk approach requires a top-down approach led by the board of directors who fully appreciate the implications of the risk/return trade-off. Risk tools, technology and models developed by academia and Wall Street have existed for over a decade. Criticisms include poor stress testing, lack of enterprise-wide risk with emphasis on silo approaches; but lets not fool ourselves the real problem is that tools are only as good as the users and the environment in which they are required to operate. FTM: Will the Madoff case have a lasting impact? DST: Recent history is littered with high profile failings, including the fall of Barings and the Enron disaster. In 2005, Samuel Israel lll, the founder of Bayou Hedge Fund Group said at his fraud trial: I lied to you and I cheated you and I cannot put into words how sorry I am. The accounting firm named by Bayou as their auditor did not even exist. This case bore more than just a passing resem
