1、小組成員：姜江 劉楚欣 盛大林 唐宇哲 許曉琛 張鵬光 張羽Influence of Operational Riskon the emergency of financial crisisFinancial Crisis?1Company level?2Financing, investing or op?3Operating?4Operational risk!5Why we choose the topic Overview of Crisis1Influence of Crisis2Operational Risk3Influence of Op risk4Contents 1Fina

2、ncial CrisisWhat happenedReasons 1.What happened2.Reasons 3.Concepts BackgroundRecessionCheap moneySubprime mortgage loanMortgage-Backed Security and CDO Saturation1.What happened2.Reasons 3.Concepts Background1.What happened2.Reasons 3.Concepts Background1.What happened2.Reasons 3.Concepts In the C

3、risisMar. 16th Bear StearnsSept.7th Fannie Mae & Freddie Mac Sept.15th Merrill Lynch & Lehman BrothersSept.16th AIGSept.21st Goldman Sachs & Morgan StanleyOct. 3rd Emergency Economic Stabilization Act1.What happened2.Reasons 3.ConceptsIn the Crisis1.What happened2.Reasons 3.ConceptsIn the Crisis1.Wh

4、at happened2.Reasons 3.Concepts In the Crisis1.What happened2.Reasons 3.ConceptsMain Reasons-FinancialImprudent Mortgage Lending SecuritizationExcessive Leverage and Relaxed Regulation of LeverageFinancial innovation and complexity1.What happened2.Reasons 3.ConceptsMain Reasons-Financial1.What happe

5、ned2.Reasons 3.ConceptsMain Reasons-Financial1.What happened2.Reasons 3.ConceptsMain Reasons-nonfinancialRating AgenciesMark-to-market AccountingHuman FrailtyOther reasonsHousing BubbleGlobal ImbalancesHuman FrailtyLack of TransparencyDeregulatory LegislationShadow Banking SystemNon-Bank RunsOff-Bal

6、ance Sheet FinanceBlack Swan EventTail RiskFragmented RegulationShort-term IncentivesOver-the-Counter DerivativesBad Computer Models1.What happened2.Reasons 3.Concepts1.What happened2.Reasons 3.Concepts3 ConceptsMortgage brokerCollateralized debt obligationCredit default swap2Influence of CrisisHow

7、the financial crisis influence real economyReal estate bubble burstFinancial crisisLiquidity shortageThe cost of borrowing money rose;The number and size of credit contracted.The difficulty of obtaining loans for SMEs increased;Consumption reduced.Entity enterprise fund chain is affected;Buying on c

8、reditReduction of outputLayoffsReduction of salaryRevenue decline or unemploymentReduction in consumptionEnterprise BankruptcyReduction in price,tax, GDPMarket collapse 3Operational RiskDefinition of Operational Risk1Inadequate or failed internal processes, people and systems or from external events

9、.Categories of Operational Risk21.Internal fraud2.External fraud3.Employment practices and workplace safety4.Clients, products, and business practices5.Damage to physical assets6.Business disruption and system failures7.Execution, delivery, and process managementOperational Losses3Losses record over

10、 10 years :$272 billion70% Clients, products, and business practices10% Internal fraud7% External fraud5% Damage to physical assets4% Execution, delivery, and process management2% Business disruption and system failures2% Employment practices and workplace safety4Influence of Operational Risk on the

11、 emergency of financial crisisCausal mechanism to the financial crisis in terms of operational riskInfluence of operational risk on the emergence of the financial crisis Causal mechanism to the financial crisis in terms of operational riskInitiation of the financial crisisLiquidity crisisRise in int

12、erbank interest rateCDO market collapseCDO value decreaseMortgage default rateLarge CDS sales by insurance companiesIncreased subprime shares in CDOsExploding CDO marketInvestment captital availabilityMassive CDO purchased by Investment BanksFalse risk information to investorsOveroptimistic credit r

13、ating of CDOsInsufficient risk capital insuranceUncontrolled residential lendinglow interest rateseconomic growthBankruptciesnot hold nearly enough capitalInvest heavilyLess restrictionFavorable ratingLoans securitizationUS housingmarket123123412345241AIG？ Influence of operational risk on the emerge

14、nce of the financial crisis New tools and models brought mortgage brokers and banks the operational risk. operational risk as competencemanagement systems needed to be supplemented to ensure proper use of new systems and toolsmisused the models, or placed too much confidence in the abilities of the

15、new toolsFigure1. global CDO issuance from 2000 to 2011A lemming in a fancy car in still a lemming Credit rating agencies gave rise to an undervaluing of risk as the result of operational risk.The SEC revealed that tools of how to conduct CDO ratings were lacking.large market demand for securitized

16、assets led to more complex CDOsundervaluing of risk ratings which did not reflect the risk of the subprime loansoveroptimistic assessmenthard to keep up with the developments Investment banks failed to manage the operational risk.models depend on the past data as a suitable predictor of the futurehighly leveraged as the opportunity to increase lendingignoring the probability of a sharp