Bionic Turtle’s Week in Risk (ending April 30th)

May is here, and that means that the FRM exam is right around the corner! There are many discussions happening in our forum right now, as candidates are preparing for the exam. David has included some of these in our blog, but make sure to stop by our forum to check out all of the other discussions! We hope you enjoy all of the interesting articles that we’ve found for you this week! 🙂

In the forum this week (selected only)

Foundations of Risk Spreadsheet

The importance of terminology (i.e., my imprecision!) in the relationship between vega and option maturity (or time to maturity)

Bank and banking

Wells Fargo investors send message of dissatisfaction in narrow board vote

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

Taking a long hard look in the mirror: should the leverage ratio reflect Pillar 2


Venezuela's Complicated Crisis For Oil

Natural Science, including Climate and Energy

Huge Arctic report ups estimates of sea-level rise

Technology, including FinTech and Cybersecurity

An obscure regulatory debate has put the entire U.S. fintech community on edge (

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

Disruptive Technologies Present Opportunities for Risk Managers

Where College Seniors Are Falling Short

Books and Courses (including Journal/SSRN)

  • Adaptive Markets, by Andrew Lo ( remarkable new paradigm puts human instinct at the heart of market behaviour … The result is dazzling in both its erudition and its charm. I suspect that Lo’s book will join the financial texts that have come to symbolise schools of thought in the public mind, like Burton Malkiel’s A Random Walk Down Wall Street (1973) or Nassim Nicholas Taleb’s The Black Swan (2007).
  • Q&A with Michael Covel author of Trend Following: How to Make a Fortune in Bull, Bear, and Black Swan Markets
  • The Business-School Boondoggle (“The Golden Passport” by Duff McDonald is a deliciously iconoclastic history of Harvard Business School)

Personal finance

  • A Student Loan Giant [Navient] Is The Most Complained-About Financial Company In America (

Navient Student Loans

IRA Flowchart

  • A New Way to Score Credit Risk: Psychometric Assessments scoring methodology was developed by EFL Global and marketed by FICO as part of our FICO Financial Inclusion Initiative, designed to open up credit markets around the world to a larger number of unbanked and underserved consumers. Sovcombank, a universal bank with more than 2 million customers, is using the score to gamify the credit application process. The EFL credit risk score is created through a dynamic behavioral design and psychometric assessment that analyzes character traits with a proven relationship to credit risk. It’s an ideal approach for applicants who do not have a credit history and therefore cannot be scored using traditional methods.
  • Big Changes Coming to How This Credit Score Is Calculated credit bureaus Experian, TransUnion and Equifax will be rolling out changes to their scoring system called VantageScore.

FICO score changes


  • Facebook and the cost of monopoly Good use of supply/demand curves “The latter of these plans was just announced just last week, and it involves a team of 60 engineers working to find a way to translate your thoughts into Facebook updates. Using non-invasive optical imaging to scan your brain a hundred times per second, eventually the goal is to allow people to type at 100 words per minute, a 5x increase over normal phone typing speeds
  • The Progress of Facebook’s 10-Year Masterplan

Facebook masterplan

Enterprise risk management (ERM) including Governance

Nonfinancial Performance to Investors

Financial reporting, including Accounting and Audit

Case Studies and Companies, including Strategic or Reputation risk’s users are upset their data was sold to Uber

Risk Foundations (FRM P1.T1)

Disruptive Technologies

Quantitative Analysis (FRM P1.T2)

Perceptions of Probability

Detecting fraud with Benford's law

  • Fat-tails everywhere even if volatility is low was reviewing an interesting research piece from Covenant Capital on kurtosis across different assets traded in the futures markets. They offer a spreadsheet tool that can allow anyone to find the number of fat-tailed occurrences relative to a normal distribution. The data show that there are fat-tails everywhere across all asset classes. We do not live in a normal distribution world.” Here is brief paper (The Persistence of Kurtosis in Financial Markets) with link to their tool

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

  • Measuring Interest Rate Risk in the Very Long Term (Federal Reserve Bank of San Francisco)
  • What I’ve learned in a year building a startup that files health insurance claims “Members’ policies are written in intentionally ambiguous language … Insurance companies run a system that is confusing by design. Insurance companies have created systems that are cumbersome and error prone by design. About 15 or 20 percent of the time, phone calls will just drop. For no discernible reason, an automated system or tele-robot will chime in with a “Goodbye” and then hang up. Companies frequently lose documentation and files, which we have to re-send in through fax machines or mail. Then their OCR, or optical character recognition systems for reading these claims, are terrible.
  • Morningstar’s New Funds Gambit: Opportunity and Controversy

Morningstar Rating

  • Creating a VIX Futures Term Structure In R From Official CBOE Settlement Data
  • A trading startup is setting out to tackle a key problem in the world’s most important market “However, liquidity in the Treasury market is divided between on-the-run Treasurys, or the most recently issued bonds and therefore the most liquid, and off-the-run bonds. Off-the-run bonds represent 98% of the total outstanding issuance in the US Treasury market, according to OpenDoor, but account for less than a third of average daily trading volume.

Credit risk (FRM P1.T6)

Internet shopping affecting real estate

Operational risk, including Legal risk (FRM P1.T7)

  • The 93 Words That Could Unlock $200 Billion in Bank Capital (Proposed changes in the way banks calculate the size of their financial cushion against operational risk could free up a windfall) Bank of America Corp. , a big portion of the firm’s operational-risk exposure stems from its purchase of Countrywide Financial, the defunct subprime lender for which it has already paid billions of dollars in fines and settlements. Operational risk accounted for $500 billion of the bank’s $1.5 trillion in risk-weighted assets at the end of 2016.

93 Words That Could Unlock $200 Billion in Bank Capital

Investment risk, including Pensions (FRM P1.T8)

Just say NO to Angel investing

Current issues (FRM P2.T9)

  • Risk-Wary Banks Chill Bitcoin Market (At least three exchanges have said in recent weeks they can’t process transactions in dollars,

Risk-Wary Banks Chill Bitcoin Market

One thought on “Bionic Turtle’s Week in Risk (ending April 30th)

  1. Greetings from Los angeles! I’m bored to death at work so I decided to check out your blog on my iphone during lunch break. I love the info you provide here and can’t wait to take a look when I get home. I’m surprised at how fast your
    blog loaded on my phone .. I’m not even using WIFI, just 3G ..

    Anyways, superb blog!

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