Risk management and financial institutions

Table of Contents: Preface *Introduction *Financial Products and How They are Used for Hedging *How Traders Manage Their Exposures *Interest Rate Risk *Volatility *Correlation and Copulas *Bank Regulation and Basel II *The VaR Measure *Market Risk VaR: Historical Simulation Approach *Market Risk VaR: Model Building Approach *Credit Risk: Estimating Default Probabilities *Credit Risk Losses and Credit VaR *Credit Derivatives *Operational Risk *Model Risk and Liquidity Risk *Economic Capital and RAROC *Weather, Energy, and Insurance Derivatives *Big Losses and What We Can Learn from Them Appendix A: Value Forward and Futures Contracts Appendix B: Valuing Swaps Appendix C: Valuing European Options Appendix D:…