The global financial crisis : a result of weak risk management

Abstract

History shows that financial and economic crises are continuously occurring and always ignited by reckless risk management and human greed. The 2007 global financial crisis unveiled some major weak points in the application of risk management. This dissertation presents a review of the 2007 global financial crisis from a risk management perspective. A comparison of the Maltese Banking sector with other sectors in developed countries is also presented to illustrate the effect that this financial crisis had on the Maltese Banks. To illustrate important facts and data, graphical representations (such as tables, graphs and diagrams) are used throughout the dissertation. This study outlines in detail the background, the risk management causes; with the inclusion of structured finance, Credit Rating Agencies, short-termism, and externalities. Finally the dissertation concludes with a discussion of the various lessons to be learned from this financial upheaval.