Van der Elst, Christoph; Bogaert, Filip --- "Risk Management in Financial Law" [2010] ELECD 579; in van Daelen, Marijn; Van der Elst, Christoph (eds), "Risk Management and Corporate Governance" (Edward Elgar Publishing, 2010)

Book Title: Risk Management and Corporate Governance

Editor(s): van Daelen, Marijn; Van der Elst, Christoph

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781849803953

Section: Chapter 4

Section Title: Risk Management in Financial Law

Author(s): Van der Elst, Christoph; Bogaert, Filip

Number of pages: 54

Extract:

4. Risk management in financial law
Christoph Van der Elst and Filip Bogaert

4.1 INTRODUCTION

Risk management is high on the agenda of all companies in the financial
industry and even of many businesses. The financial crisis requires compa-
nies to develop policies assessing risk and providing reasonable responses
to changing circumstances in a timely manner. The crisis illustrates that
these strategies are distinguishing factors in whether a (financial) company
survives or not.
As individual chapters in this book illustrate, risk management is
embedded in different fields of research. This is logical, as it is related to
doing business. Running a business implies taking risks. As long as busi-
nesses exist they are confronted with risk. This also applies to the financial
industry. Although financial transactions have taken place for thousands
of years, in the Western world it was not until during the Middle Ages that
the need was felt to transfer large sums of money, in particular to finance
the crusades. At medieval trade fairs money-changers issued documents
that were redeemable at other fairs. These documents developed into bills
of exchange. With the acceptance of endorsement of bills of exchange the
documents were easier to trade. Specific institutions were needed to accept
these endorsed bills of exchange. The documents decreased the need to hire
armed guards and mitigated the risks of robbery. It required money to be
kept in custody and supplying money in another place. Often goldsmiths
kept such valuables as gold coins but also jewels ...