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Operational Risk Management of xx company - Essay Example
Author : lydaschmeler
Finance & Accounting
Pages 12 (3012 words)
Risk Management Table of Contents Introduction 4 Identification of Risk and Analysis of Threats 5 Market, Counterparty and Credit Risk 5 Foreign Exchange Risk 6 Country Risk 6 Liquidity Risk 6 Operational Risk 7 Risk Management Framework 7 COSO Framework 8 COCO Framework 9 Risk Severity Matrix 10 Risk Management Methods of Lehman Brothers 11 Managing Market and Credit Risk 11 Managing Counterparty Risk 11 Efficient Collateral Management 11 Liquidity and Risk Modelling 12 Asset Verification 12 Sarbanes-Oxley Act of 2002 12 Restoring Faith in the Corporate Reporting Supply Chain 13 Impact of the Act on Lehman Brothers 13 Combined Code 14 Conclusion 15 Appendices 16 Reference 19 Introduction Leh…
But due to the worldwide credit crunch of 2007-08, the Lehman Brothers has resulted in a tremendous downfall. On September15, 2008, it filed for Chapter 11 bankruptcy, condemned to become the biggest bankruptcy filing in U.S. history and caused a downfall of the world’s financial system (Lounsbury and Hirsch, 2010, p.71). The federal government decided to not bail the company. The firm’s share fall more than 90% and shook financial stocks. The bankruptcy was mainly due to the sub-prime mortgage crisis. However, there were other factors also that were responsible for the failure of the company such as: the overall culture of the company, the tools they utilized and the risk management department. Lehman Brothers overleveraged themselves while not preserving the minimum capital required, depending on risk tools in isolation (Alman, Cudmore, and McVeigh, 2013, p.1). The company has obtained huge amounts of subprime mortgage debt and also the lower rated assets. ...