Risk Management in Banking. Bessis Joël

Bessis

      Risk Management in Banking

      “For bank managers, risk managers, and students of financial risk management in banking, this indispensable guide provides a comprehensive coverage of all related topics, from balance sheet management to market and credit models. The text groups all that they need to know to understand the techniques, the practices and the main models, to navigate by themselves in the ever-evolving and highly technical literature on risks, and towards further specialisations as needed. There is so much one can talk about, that many authors have a narrow and specialized approach, which does not help readers to appreciate the full scope of the field. On the other hand, this book stays focused on risk management while addressing all angles of the field. The book is an extremely valuable contribution to the knowledge of risk management.”

Christian Jimenez, Regional Director, PRMIA Paris

      “This comprehensive volume is ideal for finance professionals who aspire to deepen their knowledge of risk management in the banking sector. In an ever ever-changing environment of financial services, this entirely revised edition provides the keys to the sophistication and the technicalities of risk management techniques and models. With a combination of intellectual rigor and pragmatic application, the text integrates concisely a wide body of work, avoiding the narrower approaches of specialists. Overall, Joël Bessis offers a balanced, extensive yet relevant coverage of the far-reaching expertise needed to control and supervise risks in financial institutions.”

Elie Heriard-Dubreuil, Senior Director, Global Supranationals, Sovereign Ratings, Standard & Poor’s Rating Services

      “Understanding how banking firms operate and how risk models are designed and implemented has now become central in modern finance. This book provides a concise overview of these topics and combines analytical rigor with relevance and practices inspired by the academic and professional experiences of the author. A must-read for all students and practitioners who need to have a practical knowledge of how risk management is conducted and will evolve in banking.”

Christophe Perignon, Associate Professor of Finance, HEC Paris

      “The author’s balanced profile, combining academic background with the experience of professional life, shows up in the ‘how to’ approach for implementing models, techniques and processes, accessible to non-specialists, in the real world. A truly fantastic book and an enduring and worthy part of the financial markets literature.”

Professor Moorad Choudhry, Department of Mathematical Sciences, Brunel University, and former Treasurer, Corporate Banking Division, Royal Bank of Scotland

      “In a context where banking firms face new challenges of risk management and risk regulations, which have a direct influence of how banks develop, it is more important than ever that all professionals, bank managers and risk managers alike, have a comprehensive view of the diversity of risk management contributions, from asset-liability management to banks systems and risk models. This concise and applied coverage of risk management in banks will enable professionals to effectively to master the technicalities of the field and form educated judgments on what risk managers and risk engineers do, which impacts their own roles.”

Patrick Legland, Global Head of Research and Member of Global Capital Markets Executive Committee, Société Générale

       Risk Management in Banking

      Fourth Edition

      Joël Bessis

      This edition first published 2015

      © 2015 Joël Bessis

      Second edition published 2007, third edition published 2011 by John Wiley & Sons, Ltd

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      Library of Congress Cataloging-in-Publication Data

      Bessis, Joël.

      [Gestion des risques et gestion actif-passif des banques. English]

      Risk management in banking / Joël Bessis. – Fourth edition.

      pages cm

      Includes bibliographical references and index.

      ISBN 978-1-118-66021-8 (paperback)

      1. Bank management. 2. Risk management. 3. Asset-liability management. I. Title.

      HG1615.B45713 2015

      332.1068’1 – dc23

      2015010257

      A catalogue record for this book is available from the British Library.

      ISBN 978-1-118-66021-8 (paperback) ISBN 978-1-118-66018-8 (ebk)

      ISBN 978-1-118-66019-5 (ebk)

      Cover Design: Wiley

      Building detail ©Shutterstock/K images; Background ©iStock.com/svariophoto

      FOREWORD

      It is a truism that while every financial crisis is different, errors made in risk management in banking are timeless. I remember well reading an article from 1994, published by the Federal Reserve Bank of Minneapolis, that highlighted mistakes made by both large and small banks in the US banking crisis of 1980–81. Every single one of the recommendations made by the authors of that paper would have been relevant and applicable to banks that crashed in 2008–09. An ineffective risk management framework, coupled with an aggressive asset origination policy, will always combine to bring badly-run banks down the next time there is an economic downturn. Sound principles of risk management are vital at all times, throughout the cycle. In essence, they are timeless.

      This book is timeless. I have been familiar with it since it was first published, and have been its biggest fan ever since. It is great to see it being issued now in its 4th edition. It is one of those rare books that combines the rigor of a sound, balanced academic approach, essential if one is to operate in finance without emotion and with logic, with the accessibility and real-world relevance that is an imperative for the practitioner. It is a genuine