ABSTRACT
Th is chapter is an attempt to provide qualifi ed answers to these questions, without overemphasizing the theoretical foundation and the extensive empirical background research in the fi eld, the details of which may be provided on request to interested patricians and researchers. Some readers may be surprised to learn how long some rather signifi cant defects and ineffi ciencies in banks’ risk management systems have remained uncompensated and how far value was hence destroyed irresponsibly by those who should have known better. Moreover, it is demonstrated that a combination of organizational and market-driven corrective steps are called for, including but not limited to a reorientation of incentive systems, truly living up to what is called for in corporate governance, and rendering it compulsory to use at least those aspects of enhanced risk methodology that have been established for numerous years, while on the other hand impeding the use of risk methodological approaches that have demonstrably been proven wrong.
