his chapter turns to best practices for firm-wide management of financial risks.
The financial industry has come to realize that risk management should be
implemented on a firm-wide basis, across business lines and types of risk. This
is due to a number of factors, including (1) increased exposures to more global
sources of risk as institutions expand their operations, (2) interactions between
risk factors, and (3) linkages in products across types of market risks as well as
types of financial risks. These linkages make it important to consider correlations
among risks and products.
Interactions between types