5/3/2023 0 Comments Risk engine equity![]() A lucky outing, though, could return with a hundred and fifty thousand dollars in goods, a fortune several times the outlay, and for many investors this was enough to justify the risk. In most cases, their efforts were fruitless: data from a couple of whaling ports in Massachusetts in 1858 suggest that fully two-thirds of returning expeditions were unprofitable another study found that a third of the whale ships in the New Bedford fleet never made it home. Specialized agents in whaling-industry towns invested their own money, pooled cash from rich investors, did due diligence, and worked with captains to develop winning strategies and to plot uncrowded routes. Dispatching a whaling voyage cost between twenty and thirty thousand dollars, a small fortune in the mid-nineteenth century, and an industry emerged to get these expeditions off the dock. The people on the boat, however, weren’t the largest earners. In 1853, the Times described the whaling town of New Bedford, Massachusetts, as “probably the wealthiest place” in the United States. ![]() A captain with some skill could spend a few years leading expeditions and retire rich. A captain’s cut of the takings ranged from five to twelve per cent a first mate’s, three to seven per cent and so on, down the line. But what then?”įor those who made it through the earthly trials, there could be riches in tow. “On the eve of a Nantucket voyage, I regarded those marble tablets, and by the murky light of that darkened, doleful day read the fate of the whalemen who had gone before me,” Ishmael says, in “Moby-Dick.” “Yes, there is death in this business of whaling-a speechlessly quick chaotic bundling of a man into Eternity. If it succeeded, it had to approach the whales in silence, with a small craft strike with a harpoon stay afloat, intact, engaged, and oriented as the poor creatures thrashed about, sometimes for miles through iceberg-laden water row back to the main ship with the carcasses harvest the baleen and render the oil and survive the journey home. An expedition first needed to find whales in the vastness of the oceans. The odds of success here were, by almost every measure, poor. Any improvements in market risk modeling must be supported by corresponding changes in risk IT.For a certain sort of nineteenth-century person-the sort with high risk tolerance and little revulsion to brutality-a natural career lay in whaling. The theoretical approaches to modeling become concrete in the IT systems that support market risk, and in the output of these systems. IMPLICATIONS FOR MARKET RISK SYSTEMS - MANAGING VS MEASURING MARKET RISK Chief among these is value-at-risk (VAR) analysis but most instutions are now in the process of integrating new stress-testing analytics including rRWAscounterparty Financial institutions deploy a number of highly sophisticated mathematical and statistical techniques to calculate market risk. Market risk refers to the risk of losses in the bank's trading book due to changes in equity prices, interest rates, credit spreads, foreign-exchange rates,commodity prices, and other indicators whose values are set in a public market.
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