The rise and rise of the risk manager

Why did Swiss Bank Corp managers take so many of the key positions in the newly merged United Bank of Switzerland? One suggestion, which they won't comment on, is that SBC far outshone its bigger rival Union Bank of Switzerland in risk management and control.

As an example, there were rumblings about Union Bank's equity derivatives and equity convertible books, regarded by the market as "brave" and "adventurous" (in other words "mispriced") which were suddenly shut down in October. The extent of losses hasn't been made public.

Can this be the biggest instance to date of a risk management team providing its firm with palpable shareholder value ­ in this case a strong negotiating position going into a merger?

If so it gives those at the leading edge exactly the argument they need to explain why risk managers aren't just in-house policemen, they're portfolio optimizers: their understanding of risks can...