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| Subject: systemic risk In finance, systemic risk is the risk of collapse of an entire financial system or entire market, as opposed to risk associated with any one individual entity, group or component of a system. It can be defined as “financial system instability, potentially catastrophic, caused or exacerbated by idiosyncratic events or conditions in financial intermediaries”. It refers to the risks imposed by interlinkages and interdependencies in a system or market, where the failure of a single entity or cluster of entities can cause a cascading failure, which could potentially bankrupt or bring down the entire system or market. It is also sometimes erroneously referred to as “systematic risk”. (Wikipedia Feb 2010) Post Modern Security Analysis By John Schroy, on May 11th, 2009 |  Leave a comment  Security market observes have long noted that investors seem to jump hither and yon, like the synchronized swimming of schools of fish. This phenomenon is given the mathematical term ‘covariance’ and a numerical measure called ‘beta’. Covariance is a central concept in Modern Portfolio Theory, and also in Technical Analysis with the saying ‘the trend is your friend’. May 11th, 2009 | Print Article |  Email Article |  Topics: beta, covariance, Modern Portfolio Theory, OSINT, Stock Buybacks, systemic risk, Technical Analysis | Category: New Economic Theory | Leave a comment |  Short urlThe McKinsey Heresy By John Schroy, on April 6th, 2009 | 2 comments  The root problem with big banks today is organizational and product line complexity. Excessive complexity in banks can be traced to the reorganization of Citibank in 1956, under Walter Wriston, following the advice of McKinsey and Company. Under the McKinsey structure, banks were transformed into industrial-type marketing institutions with matrix organization by product line. Bank managers were paid to meet budgetary targets, rather than for being prudent bankers. April 6th, 2009 | Print Article | Email Article | Topics: Alfred P. Sloan, Bank of America, Charles Wilson, Chase Manhattan, Citibank, complexity, General Motors, Glass-Steagall Act, matrix organization, McKinsey, nationalization, Peter Drucker, Sandy Weill, systemic risk, Walter Wriston | Category: Financial Market Regulator, featured | 2 comments | Short urlFeatured articles on inside pages
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