Risk managers' Stock is rising

Risk managers' role become more important in Wall Street. Stan O’Neal, CEO from Merrill Lynch resigned at October, and Charles Prince, CEO from Citibank also resigned. In addition, both firms are facing bankruptcy. I think it is hard to say that it is all their faults. However, I think they were in charge of those firms, so they resigned or were resigned because they have a responsible for that result. In Merrill Lynch case, risk managers from Merrill Lynch already warned about their risks before that sub prime mortgage crisis period. However, Merrill Lynch was making huge profits from sub prime mortgage, so they could not hear what the risk managers said. Moreover, they expected the U.S economies too optimistically because almost everyone in the U.S did not expect that the U.S economy would be depressed. This is the reason why many big firms are facing bankruptcy today. Nevertheless, some companies also crashed down their business even though those companies follow their risk managers' directions. Some people might think their risk managers did not perform their tasks well, and it could be true. However, I think the risk managers did not gather information well from traders because if the traders and risk managers did not create good relationships, that could happen. Therefore, CEOs should make the good relationship between traders and risk managers, then the risk managers will give CEOs better and clear advise when the firms have problems.

http://www.businessweek.com/bwdaily/dnflash/content/jan2008/db20080128_327302.htm