ABSTRACT

After the global financial crisis hit the economy, risk management in the financial sector became an important area for investors, regulators, politicians and the general public. The crisis started suddenly and spoiled the party of the financial bonanza. It rolled out like a tsunami, first hitting the US financial sector as the US sub-prime mortgage crisis developed in 2007. Then the wave covered Europe, the Middle East and some Asian countries, achieving a global scale in 2008-9. The next wave hit the Eurozone sovereign debt, pushing the entire Governments of some European countries to the brink of default. We have been witnesses to a huge detrimental power of extreme risk events.