Risk accounting and risk management for accountants

Preface

Part 1. Risk and the Accounting Profession

1. Volatility, Uncertainty and Non-traditional Risks

1. Risk defined

2. Non-traditional risks

3. Volatility patterns

4. Financial derivatives

5. Risk is a cost

6. The science of risk management

2. Risk Management and the Accountant

1. Beyond classical accounting

2. Thinking out of the box

3. Case studies: GE and Amaranth

4. Newton's principles in analytics

5. A risk protection strategy

6. Pareto's law in management accounting

7. Using the cash account for risk control

3. Duties and Responsibilities in Risk Accounting

1. The accountant's mission in risk control

2. Creative accounting

3. Business risk

4. Business risk factors: an example

5. Monitoring assets and liabilities

6. IFRS, accounting standards and transparency

7. Personal accountability

4. Accounting for Total Exposure: A Case Study

1. Understanding total exposure

2. A real-life case study on total counterparty risk

3. Understanding where the risks really lie

4. Correlation coefficients

5. Correlations are specific to the institution

6. Confidence intervals

7. Dynamic financial analysis

Part 2. Risks to be Kept Under Close Watch

5. Credit Risk

1. Credit risk defined

2. Counterparty risk

3. Counterparty risk with hedge funds: a case study

4. Credit policy

5. Corporate lending and collateral

6. Credit and other limits

7. Stress tests for credit risk

8. SPD, SLGD, SEAD

6. Credit Risk Mitigation

1. Concepts underpinning credit risk transfer

2. For and against credit derivatives

3. Exposure associated with credit risk transfer

4. Collateralized debt obligations

5. Credit default swaps

6. The market for credit derivatives and its liquidity

7. Market Risk

1. Market risk defined

2. Trading book risk

3. Challenges to valuation of the trading book

4. Interest rate risk and organizational risk

5. Interest rate risk and foreign exchange risk

6. Stress tests for market risk

8. Position Risk

1. Position risk defined

2. Credit risk concentration

3. Market risk concentration

4. Position risk with debt instruments

5. Position risk with equities

6. Risk appetite

7. Risk of ruin

9. Beyond Credit Risk and Market Risk

1. Liquidity risk

2. Event risk

3. Legal risk

4. Longevity risk: a case study

5. Payments risk

6. Risk must be controlled intra-day

Part 3. Risk, Regulation and Management Control

10. Basel II and the Accountant

1. The Basel II framework

2. Competitive impact of Basel II

3. Accounting-based indicators

4. Tier-1, Tier-2, Tier-3 capital and the hybrids

5. The high risk of too little capital: a lesson from QIS 4 and QIS 5

6. Innovation in risk management: market discipline and operational risk

7. Return on investment from Basel II would be better governance

11. Risk-based Pricing

1. Counting the odds

2. Primary and consequential risks

3. Pricing risk

4. Mispricing credit risk

5. Marking to market

6. Marking to model

7. Beyond valuation models

12. Board of Directors and Risk Management

1. Risk control requires unconventional thinking

2. The board's responsibilities in macroeconomics

3. A devil's advocate in risk management

4. Risk management is like pre-trial preparation

5. Helping board members to understand risk and return

6. The risk management committee of the board

7. The board's responsibility for reputational risk

Index