We all know Citigroup has the biggest assets in the world, but Citigroup was facing bankrupt and U.S Congress tried to help them with a bail out program. How could this happen to Citigroup? I found this article that published on October 16, 2007. A main problem in Citigroup was lack of collecting fixed-income. It was the time that ruin of sub prime mortgages, so Citigroup’s debt went up to $3.55 million. Citigroup analyzed that they had to focus more on managing credit-risk rather than market-risk. I think if Citigroup hedged against that, they would not face bankrupt. Also, other lender, which only dealt with prime mortgage users, did not have any problems with not paying their loans. Citigroup took excessive risks because they wanted larger profits. However, they should allocate those risks by hedging or insurance.
http://www.nytimes.com/2007/10/16/business/16citi.html?sq=risk%20management&st=cse&scp=11&pagewanted=print
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