Bank and Risk

Kondor, Imre

Continually we face risks in almost all aspects of our lives. Our own activities and the activities of society as a whole are incessantly about negotiating the attainable benefits and possible risks attached to them.
The lecture is about complex systems, their operation, the role of banks and their risks. We call a system complex when it is complicated, lacks any kind of symmetry, depends on countless details and is sensitive to initial conditions making its future unforeseeable. Problematic areas of the financial world can be viewed as such complex systems and the mathematical methods developed to manage complex systems can be applied to them too.
Following the introduction of the activities carried out by banks, the main types of risks which arise are presented, including market risks, lending risks, operational and system risks. A quantitative description of risk is also given. We learn the most frequently used risk measurement tools and their deficiencies. It is characteristic of deficiencies that great losses happen much more often in reality than could be expected based on traditional theory, this calls for the thorough revision of financial theory. Then some tools are presented which enable the moderation or elimination of financial risks.
The limited protection of small investors, the maintenance of stability and the creation of equal-competition conditions made the establishment of international financial regulations necessary. The lecture mentions a few of the widely debated problems which have arisen in relation to the new international financial regulations under development.

About the lecturer