The Risk Of Rogue Trading

1688 Words Feb 27th, 2016 7 Pages
During the course of this proposed research, some related research materials were read and controls were consulted to ensure feasibility of the proposed research. The risk of rogue trading has been dated far back as the 1990s and has constantly being a source of worry by governments, financial industry and the world in general. Many controls has been developed to stem the tide and while financial institutions are constantly searching for better ways to prevent rogue trading or to mitigate the risk in the future, more incidents of financial lose has continued to occur due to the risk of rogue trading.
Impact of the risk on financial institution
A research that was done by (Pierrer Cannac, 2011), looked at how rogue trading is a risk to financial intuition. Pierre, stated that Rogue trading poses a risk to financial institution because the actions by traders who has decided to go rogue has led to huge financial loses not just to the financial institution but also to non-financial institution. Pierre specifically conducted a research on some financial institution that has been a victim of the risk of rogue trading. Two of such financial institutions were the famous Society General and Barings Bank, and was the focus of Pierre’s research. While Society General lost about 7 Billion Dollars, Barings Bank’s loss of 1 Billion Dollars caused the bank to go bankrupt. The risk of rogue trading can be as damaging as causing financial institution to go bankrupt as in the case of Barings…

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