Behavioural finance - risk attitudes in the aftermath of the economic crisis

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MacDonell, Ronan
Issue Date
MSc International Banking and Finance
Dublin Business School
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Problem: The aim is to look at the factors impacting the risk market in the aftermath of the financial crisis. Inevitably this will focus on changes after the collapse of Lehman Brothers which sent financial markets into turmoil. The model incorporated for this was focusing on core areas of attitudes to risk management within institutions, regulatory compliance and finally change management and culture. The intention was to focus on the resurrection of this market to understand where the bulk of reform came from. Discovery was initiated to understand if markets were shutting down or were they adapting to the new horizon. Methodology: The research was conducted via a qualitative interview process with a sample size of six. The sample comprised four separate global institutions and one global multi-national company. The represented a cross sectional qualitative data collection. Conclusions and recommendations: The conclusions that came out of the research were borne out of a consistently distinct response from the qualitative sample. The data collected demonstrates that institutions have become significantly overburdened with regulatory reform. As the group are agreed that enhanced regulation was needed in the aftermath of very loose regulation policy between 2006-2008 the challenge focused on how stringent governance controls could be maintained while taking some of the excessive reporting requirements out to allow it to be sustainable into the future. The concern was that without some unburdening the controls may result in policy loosening of an ad-hoc nature. This is not in the interest of competition. Recommendations have been drawn that will require the engagement of all parties to address the post-recession market and ensure an efficient work place.