Investment Risk Management

Overview

Risk management negligence within the financial services industry contributed to one of the most significant economic crisis in the recent history of the United States. During this time, Lehman Brothers, a global financial services company, filed for bankruptcy protection. This created the largest bankruptcy ever within the financial services industry. To complete this assignment, you will need to search the Internet and Strayer databases for information related to Lehman Brothers’ bankruptcy, the financial risk factors that contributed to the failure, and management’s responsibility for the failure.

Write a 5–6 page paper in which you:

1. Based on the information you research related to Lehman Brothers, assess the factors that contributed to the financial failure of the firm, indicating how management failed to manage the risk related to each factor. Make a recommendation for how firms should manage these types of risks in the future. Provide support for your recommendation.
2. High-risk investments such as mortgage-backed securities had a significant impact on the valuation of investments held with Lehman Brothers, yet many financial institutions continue to use these investments today. Assess the sufficiency of risk management techniques used by financial institutions today, indicating whether you believe the risk is appropriately managed to avoid a subsequent financial crisis. Provide support for your position.
3. Evaluate management’s role within a financial investment firm for establishing proper risk management procedures for high-risk investments and the appropriate level of accountability for portfolio performance. Determine the consequences that should be enacted when Financial Firm Management fails to perform their fiduciary obligation to investors, indicating how these consequences should be implemented. Provide support for your response.
4. Given the recent debt crisis within the eurozone of Europe, analyze the impact on the performance of foreign markets, and recommend a strategy for financial firms to minimize investment risk in these markets. Provide support for your recommendation.
5. Evaluate the role of the Federal government, if any, related to the regulation of investments by financial institutions including the scope of the role, the authority and enforcement capability within the regulatory agency, the benefits, and consequences of regulation. Predict how the regulatory environment may change over the next five years. Provide support for your prediction.
6. Use at least five quality academic resources in this assignment. Note: Wikipedia and other websites do not qualify as academic resources.

This course requires the use of Strayer Writing Standards. For assistance and information, please refer to the Strayer Writing Standards link in the left-hand menu of your course. Check with your professor for any additional instructions.

The specific course learning outcomes associated with this assignment are:

• Develop risk management strategies for a financial firm, including the role of management, the federal government, and strategies for foreign markets.