Behavioural risk management studies the psychology of financial decision-making. Interest in behavioural risk has been growing specifically because investors rarely behave according to the assumptions made in traditional financial theory. Risk behaviour is a huge issue in finance and examples of this risk type can be found in the news on a near-daily basis.
From Mark Carney’s proposal to put a proportion of bankers' salaries at risk in case of misconduct, to the FX rigging scandal and payment protection insurance corruption revealed at Lloyds, focus on and interest in risk behaviour is growing exponentially. Investment professionals can no longer afford to ignore or fail to grasp the psychological motivations which can drive high-risk decision-making. People in the industry are realising that there is a benefit to understanding people, their emotions and their behaviour because it impacts every aspect of business.
The special physical characteristics of commodities such as electricity, natural gas and oil mean that standard pricing models applied in financial markets for risk management and valuation purposes cannot simply be transferred and used as energy pricing models.
An Introduction to Models for the Energy Markets provides a clear exposition of the thinking behind the range of models used today in energy finance.
This new introductory text, clearly explains what a hedge fund is, how it interacts with service providers, how it operates and - particularly appropriate to today’s markets - what happens when things go wrong.
This comprehensive introductory guide is essential reading for anyone new to the field of operational risk. It is also highly recommended for those who have a keen interest in this topic but with limited background knowledge.