New Ways for Managing Global Financial Risks: The Next Generation (The Wiley Finance Series)

Looks at the present state-of-the-art in global financial risk management, and then at the innovations and solutions that are being developed to solve the problems with current methodologies. The author presents a closely reasoned explanation of why the traditional quantitative methods are no longer adequate and argues the case for the hybrid instrument that will arise from the merging of the capital and insurance markets. New Ways for Managing Global Financial Risks will allow readers to think differently about how global financial risk is managed, and how to simplify the process. New Ways for Managing Global Financial Risks......Page 4 Contents......Page 10 Acknowledgements......Page 12 Introduction......Page 14 1 The Traditional Capital Market Pipeline......Page 20 Traditional banking industry organization......Page 21 Product alignment......Page 22 Bank consolidations......Page 23 Global financial risk-underwriting capacity......Page 27 Proprietary trading......Page 29 Basel II......Page 33 Conclusion......Page 35 Introduction......Page 38 The corporate problem......Page 41 The insurance company problem......Page 58 The pension fund problem......Page 64 Conclusion......Page 70 3 The Status Quo......Page 72 Derivative instruments......Page 73 Will management change their behaviour?......Page 80 New accounting rules......Page 83 Basel II......Page 88 Corporates......Page 89 The insurance industry......Page 95 Pension funds......Page 100 Conclusion......Page 101 Managing the unexpected......Page 102 Set and forget budget assurance......Page 104 Cost efficiency......Page 107 Hedge efficiency......Page 108 Bundling......Page 110 Market pricing......Page 111 Underwriting capacity – counterparty diversification......Page 112 Simplicity......Page 114 Conclusion......Page 115 Introduction......Page 116 A new method......Page 117 A new process......Page 120 A new instrument for managing global financial risks......Page 124 Absolute volatility......Page 131 Relative volatility......Page 133 A new investment discipline......Page 135 The instrument and its creation......Page 138 Investment discipline (underwriting the instrument)......Page 139 Case study one – emerging market currencies......Page 142 Case study two – balance sheet risks......Page 145 Case study three – insurance company reserves (a bond portfolio)......Page 146 Case study four – an equity volatility assurance transaction......Page 147 Case study five – a global bank using a currency volatility assurance transaction......Page 151 Case study six – pension fund solutions......Page 154 7 Conclusion......Page 160 References......Page 162 Index......Page 166 Traditional derivative instruments are not easy to use and often do not produce the expected hedging results because of correlation deviation and hedge deviation. New Ways for Managing Global Financial Risk explores new financial instruments that enable companies to manage their non-core global financial risks in a more cost efficient, hedge efficient, transparent and counter party diversified manner. It delivers a new financial instrument and a new business process in which to transfer those global financial risks into the marketplace. Readers will learn about: the present issues, constraints and problems facing users of traditional derivative instruments and the ability of the global financial system to deliver risk mitigation solutions; the global financial risks that affect their company's bottom line, in ways they may not be aware; the ways in which non-core global financial risks can be managed; currencies and hard commodities, along with equity and bond portfolio risks, affecting insurance reserve management and pension fund investments; why traditional financial risk mitigation instruments (derivative instruments such as futures and options contracts) do not always provide the hedging effectiveness expected; the global capital pipeline in which global capital flows; the author explains there are too few such pipelines - a systemic financial risk - and covers the new or next generation pipeline being built today; managing non-core global financial risks more effectively; applying the new instruments and risk distribution process to their own financial issues; how to manage their businesses better through reading the real-life problems and case studies presented throughout this book. Traditional Derivative Instruments Are Not Easy To Use And Often Do Not Produce The Expected Hedging Results Because Of Correlation Deviation And Hedge Deviation. New Ways For Managing Global Financial Risk Explores New Financial Instruments That Enable Companies To Manage Their Non-core Global Financial Risks In A More Cost Efficient, Hedge Efficient, Transparent And Counter Party Diversified Manner. It Delivers A New Financial Instrument And A New Business Process In Which To Transfer Those Global Financial Risks Into The Marketplace.--jacket. The Traditional Capital Market Pipeline -- The Problem : Wake Up Management -- The Status Quo -- Characteristics Of The Next Generation Financial Risk Management Solution -- The Next Generation : A New Method, Process And Solutions -- Case Studies. Michael Hyman. Includes Bibliographical References (p. [143]-146) And Index. The traditional capital markets The problem : wake up management The status quo The characteristics of the next generation risk management solution A new method, process and solution Case studies.