Bionic Turtle’s Week in Risk (ending April 16th)

Welcome to our week in risk blog! As we get closer to exam day, our forum is getting very busy! Our forum discussions are so valuable for FRM candidates who want to get a deeper understanding of the concepts that will be tested on the exam. Stop by and ask questions, or just join in on the discussions that are happening 🙂 We hope that you enjoy all of the risk articles that we’ve found for you this week!

In the forum this week (just a selected subset)

Cash and Carry Arbitrage

Risk neutral derivative pricing

Credit linked notes

Time Series for HPR

Bank and banking

Loan growth slowdown

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

SEC Rule 613

International

China’s Trillion-Dollar Yuan Defense Puts Growth at Risk

Technology, including FinTech and Cybersecurity

  • [GARP] Introducing Event-Centric AI for Risk Management (A simple approach for developing practical implementations of artificial intelligence) http://trtl.bz/2oncXnM
  • The Dark Secret at the Heart of AI https://www.technologyreview.com/s/604087/the-dark-secret-at-the-heart-of-ai/Already, mathematical models are being used to help determine who makes parole, who’s approved for a loan, and who gets hired for a job. If you could get access to these mathematical models, it would be possible to understand their reasoning. But banks, the military, employers, and others are now turning their attention to more complex machine-learning approaches that could make automated decision-making altogether inscrutable. Deep learning, the most common of these approaches, represents a fundamentally different way to program computers.
  • An Intelligence in Our Image (The Risks of Bias and Errors in Artificial) by RAND Corporation Intelligencehttps://www.rand.org/pubs/research_reports/RR1744.html
  • How Failing to Develop a Disruption Model Can Kill Good Companies http://www.brinknews.com/how-failing-to-develop-a-disruption-model-can-kill-good-companies/About 70% of risk managers believe artificial intelligence (AI) represents a foundational change for their enterprise, yet only 15 percent of them are using it. More than 40 percent of risk managers believe AI’s significance is 1-3 years away, yet more than half of risk managers acknowledge having no plans to implement AI. Despite being in the business of risk, the majority has no risk mitigation plan for adoption or non-adoption.

Industry structure change

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

High Frequency Trading

Personal Finance

Other

Global Data Protection

  • A Decade Later: What The Virginia Tech Tragedy Taught Us About Active Assailant Prevention And Response http://trtl.bz/2oGjQDV

Financial reporting, including Accounting and Audit

Case Studies and Companies, including Strategic or Reputation risk

  • At Wells Fargo, Crushing Pressure and Lax Oversight Produced a Scandal https://www.nytimes.com/2017/04/10/business/dealbook/11wells-fargo-account-scandal.html “To make the sham accounts look legitimate, Wells Fargo bankers engaged in a practice called simulated funding, the board’s report said. This was an illegal sleight of hand in which an employee transferred funds from one customer account to another, sometimes unauthorized account (or deposited and withdrew the employee’s own funds) to make it appear that the second account had been funded by the customer.
  • Five damning revelations from Wells Fargo’s report https://www.ft.com/content/3de4cb5a-1e0b-11e7-a454-ab04428977f9
  • Wells Fargo Fake Accounts Investigation Whitewashes Glaring Risk Management Failures (by Yves Smith at naked capitalism) http://trtl.bz/2oLMvbcEven worse, the report proves the board’s negligence by indicating it had noticed a major deficiency, that control functions were reporting to unit/profit center managers like Tolstedt, in 2013, yet was leisurely about addressing it. Keep in mind that is exactly the same kind of deficient structure that led to the JP Morgan London Whale scandal. It is a basic risk management failure to have control staff report to profit center managers. In fact, they are designed to be for show only. Does anyone with an operating brain cell think someone would make their boss look bad?
  • Secret Recordings Play Role in SEC Probe of Insurer AmTrust https://www.wsj.com/articles/secret-recordings-play-role-in-sec-probe-of-insurer-amtrust-1491903011 “Unknown to the colleagues, the auditor was carrying a tiny recording device disguised as an ordinary Starbucks gift card, capturing every word for the Federal Bureau of Investigation … Before going to the government, the whistleblower—the former BDO auditor—joined forces in 2013 with a larger group that includes Harry Markopolos, a forensic accountant who warned the SEC about the Madoff scheme before it became public in late 2008. The Markopolos group hopes to profit by collecting a reward under the SEC’s Whistleblower Program, if the agency ever successfully brings legal action in the matter.

SEC Probe of AmTrust

Risk Foundations (FRM P1.T1)

Quantitative Analysis (FRM P1.T2)

40 Questions on Probability for data science

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

EFT Shortcomings

Valuation and Risk Models, including Country risk (FRM P1.T4)

Credit risk (FRM P1.T6)

Bonds backed by auto loans toxic

Investment risk, including Pensions (FRM P1.T8)

Yale Endowment

Why We [wealthfront] Avoid BlackRock ETFs

Indexes Beat Stock Pickers Even Over 15 Years

Current issues (FRM P2.T9)

virtual currency

Bitcoin trading

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Recent Posts

Week in Financial Education (April 12, 2021)

I hope you enjoy my latest non-stationary time series (TS) question set (T2.21.1. below). As with the previous TS Q&A, I provided code snippets to...

Read More

Week in Financial Education (April 5, 2021)

This week we had a interesting question about the definition of duration due to an apparent difference between GARP's new material and Tuckman. It's a...

Read More
FRM week in risk

Week in Financial Education (March 29, 2021)

Hello valued visitors! We're bringing back Week in Risk but calling it Our Week in Financial Education until we find a better title. Maybe you noticed our exciting news? We...

Read More