Investing in Risk: The Enduring Legacy of the Subprime Meltdown

Sponsored By Diamond Management & Technology Consultants

Topics:

Banking & Capital Markets > Debt/Bonds

Finance & Risk Management

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Abstract:

Senior Wall Street executives were blindsided by the subprime mortgage meltdown because their systems and processes shrouded the aggregate risks they were taking on. If these executives had received and acted upon aggregated firmwide risk reports, there would have been a far greater awareness of the degree to which a firm's fortunes were tied to the mortgage business. Instead, major U.S. banks and securities firms are expected to take cumulative write-downs in excess of $100 billion as the credit crisis unfolds. The majority, but notably not all, of decision-makers at the top banks and investment houses simply lacked the depth of information required to appropriately assess the risk of their many investments. The critical difference between victors and victims-both today and in the future-lies in the consistent investment in risk assessment infrastructure, enabling the winning firms to act quickly and decisively during times of market upheaval to solidify their gains.

DETAILS

Sponsored by: Diamond Management & Technology Consultants

Released: March 27, 2008

Length: 9 pages

Format: PDF (496 kb)

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