Risks in the Lifecycle of Derivatives
The financial press usually concentrates on how financial derivatives are utilized to hedge or speculate or on how the misuse of financial derivatives has caused significant financial losses at financial institutions, municipalities, and corporations. Yet, key legal and operational risks in the global use of financial derivatives remain a mystery, even to many practitioners in this rapidly growing global industry. Transacting derivatives is detailed and document intensive. The very architecture of derivatives’ front, middle, and back office functions can present numerous challenges to both on-site and off-site bank examiners, auditors, and compliance professionals. These professionals require specialized and routinely upgraded supervisory skills to meet their demanding objectives.