Wrong way risk: Difference between revisions
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imported>Doug Williamson (Link with new Guide to risk management page & remove link to old Risk management page, and link with Swap page.) |
imported>Doug Williamson (Link with Hedge page.) |
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== See also == | == See also == | ||
* [[Hedge]] | |||
* [[Guide to risk management]] | * [[Guide to risk management]] | ||
* [[Swap]] | * [[Swap]] | ||
[[Category:Manage_risks]] | [[Category:Manage_risks]] | ||
Latest revision as of 20:53, 4 April 2015
The risk that the value/effectiveness of a hedge or risk management product is most doubtful when most needed.
For example, when the credit standing of the seller of securities in a repo is positively correlated with that of the security sold.
This was illustrated in swaps when Parmalat the Italian dairy firm (in 2003 Europe's biggest bankruptcy) sold credit default swaps on itself.
