Bionic Turtle’s Week in Risk (ending February 5th)

New Practice Questions

In the forum this week (selected only) 

Bank and Banking

Political and regulatory risk, including Systemic Risk (including BIS)

Technology, including FinTech and Cybersecurity

Exams, Financial Associations (GARP, FRM, CFA Institute) and Careers, including CRO Interviews

Books and Courses (including Journal/SSRN)

Data science (primarily R), including Alternative Data

Personal finance


Enterprise risk management (ERM) including governance

  • BlackRock, Vanguard and State Street bulk up governance staff focus on corporate governance comes as regulators and politicians around the world increasingly scrutinise the relationship between companies and their shareholders. Asset managers have previously been accused of routinely supporting company proposals in order to avoid damaging their relationships with senior executives … The belief is that better governance analysis helps investors avoid companies that are on the brink of a costly scandal. This issue has come to the fore over the past two years after the exposure of serious governance failings at Petrobras, the Brazilian oil company, and Volkswagen, the German carmaker, which caused their share prices to fall dramatically.
  • The ISO 31000 Risk Management Process

Financial reporting, including Accounting and Audit

  • Facebook Earnings Enjoy a Nearly $1 Billion Tax Windfall From Accounting Change[When employees exercise their stock options] is compensation cost to the company, and it is tax-deductible. When options are exercised, it is typically after the company’s stock price has risen, making them more valuable, and so the company recognizes excess tax benefits—the deductions over and above those it expected to realize when the options were first granted. Under the old rules, those excess tax benefits go into the company’s shareholder equity. But under the FASB change, they will be recognized on the income statement immediately—and that reduces the company’s provision for taxes, boosting net income.

Quantitative Analysis (FRM P1.T2)

Financial Markets and Products, including Interest Rates, Commodity Risk, and Foreign Exchange (FX)(FRM P1.T3)

Credit risk (FRM P1.T6)

Investment risk, including Pensions (FRM P1.T8)

Current issues (FRM P2.T9)

  • Derivatives ‘Big Bang’ catches market off guard (Unprepared counterparties risk being shut out of swaps business after March shake-up) regulators have succeeded in pushing three-quarters of the interest rate derivatives market, or what are known as standardised trades, into clearing houses that sit between a buyer and seller and manage the fallout should one side default. The remainder of the market, with a notional value of $110tn, is made up of bespoke deals that are harder to value and price over time. It is this part of the market that faces an imminent shake-up, including the need for those entering derivative contracts to begin supplying variation margin, a form of insurance that moves daily to match fluctuations in asset prices.

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