Beyond distributional analysis

In the third article in a four-part series, David Rowe considers the need for financial risk management to move beyond distributional analysis to consider more qualitative inputs

Since the mid-1980s, financial risk management has developed many complex methods for summarising and aggregating risk. These widely applied techniques are useful for managing day-to-day fluctuations, but in too many organisations they have blinded management to the need to analyse an array of structural issues that come to the fore in a severe systemic crisis. The following are two of the areas