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 * about Jón Daníelsson
 * research
 * books
   * Financial Risk Forecasting
   * Global Financial Systems
   * Illusion of Control
 * blog
 * daily risk forecast



 * about Jon Danielsson
 * research
 * books
   * Financial Risk Forecasting
   * Global Financial Systems
   * Illusion of Control
 * blog
 * daily risk forecast

The Illusion of Control
Jón Daníelsson
Yale University press
Buy it on Amazon

“When someone hacks financial regulations, the regulator cannot respond within
hours or days. It might have to wait decades.”
***
A challenge to the conventional wisdom surrounding financial risk, providing
insight into why easy solutions to control the financial system are doomed to
fail
Finance plays a key role in the prosperity of the modern world — but it also
brings grave dangers. We seek to manage those threats with a vast array of
sophisticated mathematical tools and techniques of financial risk management.
Too often though, we fail to address the greatest risk — the peril posed by our
own behavior ‎
Critical risk is generated from within, through the interactions of individuals
and perpetuated by their beliefs, objectives, abilities, and prejudices. The
widespread belief that risk originates outside the financial system frustrates
our ability to measure and manage it, and the likely consequences of new
regulations will help alleviate small-scale risks but, perversely, encourage
excessive risk taking. Lessons from past and recent crises show that diversity
is the best way to safeguard our financial system.‎
“When someone hacks financial regulations, the regulator cannot respond within
hours or days. It might have to wait decades.”
***
slide 1 to 4 of 5
Yves Mersch,
Former ECB board member and vice-chair, Single Supervisory Mechanism
"Too little financial regulation or too much of the wrong kind? Whatever your
view, Jon Daníelsson’s lively account and richly informed discussion will surely
intrigue you and challenge preconceptions"
Lutfey Siddiqi,
Risk Management Institute, National University of Singapore
"Financial regulators should be required to read this book. It shows in
sparkling and non-technical language what aspects of risk can, and frequently
cannot, be measured. Anyone concerned with portfolio management should read it."
Charles Goodhart,
London School of Economics
"Jon Danielsson makes a compelling case for a fundamental re-think in the
approach to risk management taken by both financial services firms and their
regulators. Those charged with the management, governance and regulation of risk
– either at the level of an entity or an economy – should benefit enormously
from Jon’s alternative framework.”
Patrick Honohan,
Former Governor, Central Bank of Ireland
"Is international cooperation on regulatory standards stifling good risk taking,
leading to bad risk taking? Refreshingly critical, The Illusion of Control is an
important contribution to the ongoing mapping of financial risk."

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