The Challenges of Risk Management in Diversified Financial Companies

[...]This article examines the economic rationale for managingrisk on a firmwide, consolidated basis. Our goal is to lay outsome of the key issues that supervisors and risk managementpractitioners have confronted in assessing and developingconsolidated risk management systems. In doing so, we hope toclarify for a wider audience why the ideal of consolidated riskmanagement—which may seem uncontroversial or evenobvious—involves significant conceptual and practical issues.We also hope to suggest areas where research by practitionersand academics could help resolve some of these issues.[...]