Managing market risk through crisis periods

As financial markets rise and fall within expected trading ranges on most days in history, it is very easy to become comfortable with this “normal” market behavior. However, there are events that take place every 5-10 years that radically disrupt this “standard” expectation. Going back 30 years in the US, we can recall the 1987 stock market crash, the 1997 Long Term Capital Crisis, the tragedy of September 11th, 2001, the 2008/2009 Financial Crisis and now the reaction to the worldwide pandemic of the Corona Virus. The causes of market disruptions are varied but the preparation for any of these unpredicted events remains the same. And as history indicates, our current crisis certainly will not be the last.

Practices

We enter risk management without a crystal ball to predict events. However, we do possess a wealth of information about our past. We know magnitudes of past price movements, we can study relationships between products during crisis periods, we know that our fears can be rational and/or irrational, and we know that we are all human beings who act emotionally in times of uncertainty. 

KRM22’s Global Risk Platform provides applications to help you address your firm’s regulatory, market, technology and operations risk challenges and to manage your entire enterprise risk profile. KRM22 is a public Group listed on AIM and headquartered in London, with offices in several of the world’s major financial centers.

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