Lagging risk management

The rate of growth in the complexity of new derivatives products is causing a worrisome lag in risk management's ability to keep pace. As credit derivatives markets endure a period of stress, this lag could have serious consequences, argues David Rowe

Competition is the great driving force of human advance. The essential flaw of collectivist approaches to public policy is to focus on static efficiency at the expense of incentives for innovation necessary for long-term growth. That said, competition does have its dark side when markets are booming, risk premiums fall and planning horizons shrink. When industry peers are reporting lucrative