Regulators and consumers want banks to be safe, but banking is the art and science of juggling and transforming risk. Banks’ profits come from selecting the most lucrative and manageable risks. Without risk, there would be no need for banks, and you could leave your money under your mattress without concern. The real challenge lies in managing risk well, which is easier said than done, as this wide-ranging study by Professor René M. Stulz proves. getAbstract recommends his solid exploration of bank risk management to financial professionals.
In this summary, you will learn
- Why risk management is crucial in banking;
- Why perfect risk management is impossible; and
- What influence culture, incentives and organization have in risk management.
About the Author
René M. Stulz is a finance professor at the Fisher College of Business at Ohio State University.