finance presents distinct risks to different people

Investors talk about returns, growth, opportunities, aggressive/conservative, hedging, tail risk, risk profile..—-> market risk. Not credit risk, not liquidity risk, not counter-party risk.

Regulators talk about systemic risk, controls, reserves, transparency, protecting (those to be protected). They mean —-> liquidity risk.

Exchanges talk about integrity, stability … —> c-risk

Traders are accused of taking the profit but not the risk since it’s other people’s money. We are talking about —–> market risk, not liquidity risk. Credit analysis and approval is, i guess, not the trader’s job.

In an economy, investment banks are dwarfed by commercial banks. For their credit card, car loan, student loan, mortgage departments, risk means —–> credit risk, not liquidity risk, not market risk.

Hedge funds and mutual funds traders? market risk

Hedge funds owners during a crisis? liquidity risk

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s