Financial Markets and Portfolio Management

, Volume 30, Issue 1, pp 111–112 | Cite as

Karamjeet Paul: Managing extreme financial risk: strategies and tactics for going concerns

Elsevier, 2014, 145 pages
  • Simon StraumanEmail author
Book Review

Market turbulence, harsh drawdowns, and financial crashes have repeatedly occurred in the history of financial markets over the last decades. Independent of their exact nature and origin, all these crises have one common factor, namely, tail risk. In contrast to normal risk, tail risk is only triggered in extreme situations and, hence, is one of the main contributing factors to financial crises. In his book, Karamjeet Paul develops a novel approach for handling financial risk—both normal and tail-sided. Instead of developing yet another approach for quantitatively measuring overall risk, the author introduces the concept of “sustainability management.” This concept is based on two main pillars. First, it disentangles risk management into normal risk and extreme tail risk. Whereas normal risk is rewarded with revenues (and therefore is closely linked to the institution’s revenue model), tail risks are not rewarded and, consequently, need an own perspective/management. Second, the...

Copyright information

© Swiss Society for Financial Market Research 2016

Authors and Affiliations

  1. 1.University of St. GallenSt. GallenSwitzerland

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