Regulators and regulated are running scared after the events of August and September last year. “I’m more confused about valuation [of financial assets] than I have been for some time, said a leading risk manager at a brain-storming session in Geneva last month.
But the shock to the risk-management community is producing some new, or perhaps old, thinking: a financial firm’s risk assets can only truly be valued in relation to its liabilities. For example: take an illiquid investment such as a venture-capital stake.
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