Coulter considers risk concentration

In a wide-ranging speech at the International Swaps and Derivatives Association annual meeting in Chicago at the end of March, the vice-chairman of JP Morgan Chase, David Coulter, considered why there were continuing questions raised over the role of derivatives and the risks associated with them when “this is a world where risk management tools are needed more than ever, and one that is well-suited for the sensible application of derivatives”.

In the speech, entitled Derivatives, risk, governance: a call to action, Coulter specifically addressed concerns about the concentration of risk among a small group of financial intermediaries – of which JP Morgan is by far the largest.

The following is an edited extract from his speech:

“Probably one of the biggest questions around systemic risk is the issue of participant exit. Does the