Risk Management and Behavioral Finance

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Title	Risk Management and Behavioral Finance
Authors	Prince, E.T.
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Keywords	ризик риск risk поведінкові фінанси поведенческие финансы behavioral finance фінансовий підпис финансовая подпись financial signature пізнавальні упередження когнитивные предубеждения cognitive biases ірраціональність иррациональность irrationality
Type	Article
Date of Issue	2018
URI	http://essuir.sumdu.edu.ua/handle/123456789/69947
Publisher	Sumy State University
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Citation	E. T. Prince. (2018). Risk Management and Behavioral Finance. Financial Markets, Institutions and Risks, 2(2), 5-21. DOI: 10.21272/fmir.2(2).5-21.2018
Abstract	Risk management is still dated in concept. It assumes a compliance approach. Current risk management approaches have failed in predicting both macro-economic and micro-economic setbacks and disasters. This is because financial metrics, the basis for modern risk metrics, are actually a lagging indicator of risk, not a leading indicator. Risk management needs a new paradigm which is based on leading indicators and which can therefore predict such problems. Behavioral finance provides the framework for a new paradigm for risk management.
Appears in Collections:	Financial Markets, Institutions and Risks (FMIR)