Risk Management Lessons From The Financial Crisis: A Textual Analysis of The Financial Crisis Inquiry Commission's Report

Abstract

There have been several retrospective analyses of the financial crisis. An areathat continues to receive attention is the failure of risk management in financial firmsat the heart of the crisis. After the crisis, the United States Government convenedthe Financial Crisis Inquiry Commission to explore causes of the crisis. Theirconclusions have gone largely unexplored, especially in academic research. In thisstudy, I first examine the commission’s report on the crisis identifying several reappearingthemes. An exploratory follow-up analysis looking at financial and nonfinancialfirms suggests non-financial firms have areas to improve upon compared totheir financial counterparts.