Which risk metric do you consider most appropriate

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Reference no: EM133647622

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I. How did JP Morgan find itself in this position? Develop a timeline of events from 2011 to the summer of 2012.

II. Consider standard market risk management practices for financial institutions, such as VAR:

1. Why was the risk management not sufficient to prevent such an extraordinary loss?

2. Which risk metric do you consider most appropriate? Should liquidity of an asset be considered as well?

3. Consider risk-weighted assets: should they include net exposure or gross exposure? Should derivatives of all types be regarded as the same type of RWA?

III. Is it appropriate to employ derivatives in a cash management function?

IV. How did the bank, its shareholders and the regulators react to the situation? Were these reactions appropriate?

V. Consider the organizational structure and processes at JP Morgan in early 2011:

1. How active should/can risk management be in terms of enforcing limits or breaches?

2. Would it help to change the organizational structure of JP Morgan?

3. If you were to redesign the risk management policy, what would be your top three changes?

VI. Describe the lessons you would take away and the steps you would take to prevent a similar occurrence in your company.

Reference no: EM133647622

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