Awards for Excellence 2007: Best Risk Management House
HSBC is finding increasingly sophisticated ways to fulfil the traditional role of the risk manager – mitigating risk rather than seeking it out.
Also shortlisted in this category:
The head of risk management sales at a large European bank asks Euromoney to think of his customers as gamblers sitting in a casino. It’s been a long night and those few who have been losing are very cautious with what little money they have left. But it’s been a great night for many and these lucky winners are keen to extend their good fortune through increasingly extravagant bets. That’s how the risk management business has changed during the past few years of rising financial asset prices and declining volatility. Derivatives teams that started life devising ways for customers to lay off or reduce unwanted risks – such as currency exposure arising from investments in overseas bond markets, or low-rate foreign currency liabilities – are spending more time devising leveraged derivative instruments on new correlations to increase potential pay-offs for hedge funds and other specialist investors while getting risk off their own banks’ prop desks.
The winner of this year’s best risk management house award, HSBC, has done some of this, but has devoted much more of its efforts to the traditional role of helping corporate and institutional investor clients identify and mitigate risks that they do not want or that they are not being rewarded for taking.