Understanding and managing risk
1 Risk and the financial crisis
In September 2011, the eurozone governments were grappling with the debt crisis in Greece and the risks this posed to the banking system – given many banks had invested in Greece and other troubled European economies including Portugal, Spain and Italy. In the midst of this crisis one European bank – the United Bank of Switzerland (UBS) – announced that it had uncovered a huge and unexpected financial loss amounting to $2.3 billion as a result of the alleged activities of a rogue trader, Kweku Adoboli, based at the London offices of UBS.
Adoboli had allegedly run up these losses through transactions in the global equity markets – but had concealed these losses by establishing other fictitious transactions which covered up the actual losses the real transactions had made. Following the discovery of these losses, Adoboli was arrested and charged with fraud. At the time of writing he is on remand in prison awaiting his trial.
In September 2011, the eurozone governments were grappling with the debt crisis in Greece and the risks this posed to the banking system – given many banks had invested in Greece and other troubled European economies including Portugal, Spain and Italy. In the midst of this crisis one European bank – the United Bank of Switzerland (UBS) – announced that it had uncovered a huge and unexpected financial loss amounting to $2.3 billion as a result of the alleged activities of a rogue trader, Kweku Adoboli, based at the London offices of UBS.
Adoboli had allegedly run up these losses through transactions in the global equity markets – but had concealed these losses by establishing other fictitious transactions which covered up the actual losses the real transactions had made. Following the discovery of these losses, Adoboli was arrested and charged with fraud. At the time of writing he is on remand in prison awaiting his trial.
