Customer Reviews

Value Added Risk Management in Financial Institutions: Leveraging Basel II & Risk Adjusted Performance Measurement (Wiley Finance)

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Given the dual pressures banks face from regulators and investors to address the challenges of Basle 2 and create shareholder value, this book is highly relevant and timely. It provides practical, concise and real world guidance to any senior bank executive seeking to add value in his institution by optimizing the usage of economic capital. Economic capital based performance measures are clearly presented and illustrated with real life examples. Additionally, anyone implementing Basle 2 must ask how this can be done and what value it creates for the organization. This book provides the answers.

The book quickly gives a real world context the value of risk management information to bank CEOs, CFOs, institutional security analysts, and investors. It then goes on to demonstrate theoretically and practically how risk management information can be used to address key strategic decisions faced by senior bank management.

Any risk manager, CFO, or CEO in a financial institution should find this book valuable if they seek to create shareholder value in their institution. Similarly, anyone seeking to rise to the executive suite must understand the issues addressed in this well written book.

Belmont has done an exceptional job at communicating the importance and practical application of risk measures for today's business environment. The book offers the reader a thorough assessment of what banking executives face everyday and how best to manage these risk and regain the control necessary for any banking executive to grow its business without putting into jeopardy the best interest of its shareholders, which in no small measure is a testament to Belmont's clear understanding of the challenges faced by most executives and the demands they face in terms of managing near term performance goals with long term stability.

Even without the incentives provided by the upcoming Basel 2 guidelines, this book is timely and convincingly puts forth the proposition that active risk management is in itself a valuable component in the creation of shareholder value. Returns on investment in more sophisticated tools for risk quantification will be enhanced when the information is not only used for performance measurement, but also for such shareholder value-added activities such as capital allocation and balance sheet structuring.

I recommend this book for all practitioners of risk management.

This is a book that every bank board member should read. Sure, any board member worth his/her salt will be familiar with Basel II and risk measures such as VaR, but how many think of Basel II as a cost or imposition, and VaR as just another piece of information? Mr Belmont's easy to follow approach should allow readers to examine the way in which they can differentiate their own institution by using the investment in regulatory risk management to create, rather than just protect,shareholder value.

Thankfully, Mr Belmont strikes a good balance between theory and reality, both in his explanantion of market behaviour and in the presentation of his arguments. This is a book that the "mathematically challenged" like me can still enjoy and benfit from.

This book is a gem - very timely and well-thought out. David Belmont obviously has a lot of experience in this area, but also has put in a lot of thought-leadership into this book. He traces the Basel II accord to its roots in M&M economics, and convincingly argues why bank risk management is a critical function. He then traces a thread from risk management to capital management and shows why and how banks can make use of Basel implementations to achieve a high degree of control and positioning of their operations.
The only knock on this book is that I found several typos and simple editing errors - it is clear that deadlines won over editorial quality. Hopefully the next edition will be cleared up in this regard - nevertheless I highly recommend this book.