What can risk managers in Thailand learn from recent global economic crisis?
By Jon Fernquest
Today's
Bangkok Post features a summary of a speech on risk
management
given by the head of Thailand's SEC.The article provides an overview of problems in the international economy and global financial imbalances.
Today's article is also rich in concepts and vocabulary. It begins after the vocabulary:
risk
- danger, how likely or possible it is for a bad event that causes harm
and damage ความเสี่ยง
risk management - "the identification to minimize, monitor, and control the probability and impact of unfortunate events" (See Wikipedia)
risk managers - skilled workers trained in risk management
Securities and Exchange Commission (SEC) - the government agency that polices the stock market
global financial imbalances - a condition in the international economy that cannot continue for a long period of time (for example: large trade surpluses in Asia matched by large trade deficits in the US)
concepts - ideas or principles แนวความคิด
risk management - "the identification to minimize, monitor, and control the probability and impact of unfortunate events" (See Wikipedia)
risk managers - skilled workers trained in risk management
Securities and Exchange Commission (SEC) - the government agency that polices the stock market
global financial imbalances - a condition in the international economy that cannot continue for a long period of time (for example: large trade surpluses in Asia matched by large trade deficits in the US)
concepts - ideas or principles แนวความคิด
INVESTING
2010 a tough year for risk managers
More crises loom amid imbalances17/02/2010
Risk managers will face even greater challenges this year as global financial markets will remain volatile in the near term, says Thirachai Phuvanatnaranubala, secretary-general of the Securities and Exchange Commission.
The global crisis stemmed from several factors, including high leveraging by US investment banks, poor lending controls by US banks, a lack of due dilligence for securitised debt, and a misreading of credit risks by ratings agencies, Mr Thirachai said at a risk management conference held by the Thai Listed Companies Association.
tough
- difficult ยากลำบาก
loom - will likely happen in the near future
global - throughout the world ทั่วโลก
volatile - of something that may change suddenly or become more dangerous ที่ปะทุได้ง่าย
volatile - changing quickly and unpredictably, the public does not know how to react and plan for the future เปลี่ยนแปลงอย่างทันทีทันใดและโดยคาดการณ์ไม่ได้
term - a period of time
near term - in the near future
crisis - an urgent, difficult or dangerous situation วิกฤต
factors - one of the things that effects a situation or event ปัจจัย
leveraging - borrowing a lot to buy assets
investment - taking your money and putting it into projects to make a profit or earn interest (buying stock shares, bonds, real estate)
lending - giving money to someone who agrees to pay it back in the future การให้ยืม
lack - does not have ขาดแคลน
due - adequate; done according to the usual standards or rules
due diligence - a careful check for true value and risk before purchasing or selling (See Wikipedia)
debt - an amount of money that you owe หนี้
securitised debt -
credit - loans
misreading - did not understand what was happening, incorrect understanding
credit risks - the danger that the borrower does not pay the money borrowed back to the lender
ratings agencies - companies that keep a record of late payments by borrowers or failure to pay back at all (default)
loom - will likely happen in the near future
global - throughout the world ทั่วโลก
volatile - of something that may change suddenly or become more dangerous ที่ปะทุได้ง่าย
volatile - changing quickly and unpredictably, the public does not know how to react and plan for the future เปลี่ยนแปลงอย่างทันทีทันใดและโดยคาดการณ์ไม่ได้
term - a period of time
near term - in the near future
crisis - an urgent, difficult or dangerous situation วิกฤต
factors - one of the things that effects a situation or event ปัจจัย
leveraging - borrowing a lot to buy assets
investment - taking your money and putting it into projects to make a profit or earn interest (buying stock shares, bonds, real estate)
lending - giving money to someone who agrees to pay it back in the future การให้ยืม
lack - does not have ขาดแคลน
due - adequate; done according to the usual standards or rules
due diligence - a careful check for true value and risk before purchasing or selling (See Wikipedia)
debt - an amount of money that you owe หนี้
securitised debt -
credit - loans
misreading - did not understand what was happening, incorrect understanding
credit risks - the danger that the borrower does not pay the money borrowed back to the lender
ratings agencies - companies that keep a record of late payments by borrowers or failure to pay back at all (default)
But the crisis was actually rooted in global financial imbalances, namely that Asian exports resulted in huge trade surpluses for the region while the US, acting as global consumers, built up massive deficits.
Although the risk factors [of this crisis] have been mostly identified, there is no guarantee for the future," he said. "We might still see future crises, given that the cause of the current crisis wasn't just weak controls in the financial sector but also global imbalances.
rooted in - caused
by
trade surpluses - when exports out of a country are greater than imports into a country
trade - the buying and selling of goods การค้าขาย
consumers - people who buy things (individuals and families)
massive - very large มหาศาล
deficits - when spending is greater than money coming in (must be financed by borrowing and increased debt)
identified - named ระบุชื่อ
guarantee - a promise that something will be done or will happen คำรับรอง, การประกัน
current - of the present time ปัจจุบัน
sector - a part of a country's economic or business activity ภาค (เศรษฐกิจ)
trade surpluses - when exports out of a country are greater than imports into a country
trade - the buying and selling of goods การค้าขาย
consumers - people who buy things (individuals and families)
massive - very large มหาศาล
deficits - when spending is greater than money coming in (must be financed by borrowing and increased debt)
identified - named ระบุชื่อ
guarantee - a promise that something will be done or will happen คำรับรอง, การประกัน
current - of the present time ปัจจุบัน
sector - a part of a country's economic or business activity ภาค (เศรษฐกิจ)
Many countries sought to keep their currencies weak against the greenback even when an asset bubble built in the US, he said.
To unwind these imbalances, a number of things have to happen. First, [Asian] countries must let their currencies appreciate. This seems hard if China continues to restrict exchange rate flexibility, as other countries are afraid to lose out from being within the Chinese supply chain.
asset
- something owned by a person, company etc., particularly money and
property ทรัพย์สิน
asset bubble - when the overall value of assets in an economy rises far above its real long-term value
asset bubble bursts - when the value of assets in an economy suddenly returns to the long-term real value
rate - the level or speed at which something happens or changes, or the amount or number of times it happens or changes in a particular period อัตรา
flexibility - can change easily and adapt to new situations and conditions as they occur ความยืดหยุ่น
supply chain - the many stages of producing a product that involve many different companies in many different countries
asset bubble - when the overall value of assets in an economy rises far above its real long-term value
asset bubble bursts - when the value of assets in an economy suddenly returns to the long-term real value
rate - the level or speed at which something happens or changes, or the amount or number of times it happens or changes in a particular period อัตรา
flexibility - can change easily and adapt to new situations and conditions as they occur ความยืดหยุ่น
supply chain - the many stages of producing a product that involve many different companies in many different countries
Second, regional purchasing power must be increased through measures such as market flexibility to changes in salaries and wages through collective bargaining.
Third, financial market development must continue, particularly in the area of retail credit. Market liberalisation is another factor, with intraregional trade encouraged to compensate for lower demand from the US.
measures
- actions taken to deal with a problem มาตราการ
wages - the amount of money earned per hour by a worker
collective - involving all the members of a group ที่เป็นจำนวนมาก ที่เป็นกลุ่มใหญ่
bargaining - try to get a better deal from someone (for example, a better price for something you want to buy)
collective bargaining -
development - the gradual growth and formation of something
retail - to sell directly to the public for their own use ขายปลีก
retail credit - loans to buy things in stores
liberalisation - when laws or attitudes become less strict and people are allowed more freedom of action (See glossary) เสรีภาพในการแสดงความคิดเห็นหรือแสดงออก
factor - a fact or situation which influences the result of something ปัจจัย
intraregional trade - the buying and selling of goods within a region
encouraged - having more confidence or hope about something มีกำลังใจ
X compensate for Y - X to replace or make up for Y which is low
demand - consumers needing or wanting to buy goods and services
wages - the amount of money earned per hour by a worker
collective - involving all the members of a group ที่เป็นจำนวนมาก ที่เป็นกลุ่มใหญ่
bargaining - try to get a better deal from someone (for example, a better price for something you want to buy)
collective bargaining -
development - the gradual growth and formation of something
retail - to sell directly to the public for their own use ขายปลีก
retail credit - loans to buy things in stores
liberalisation - when laws or attitudes become less strict and people are allowed more freedom of action (See glossary) เสรีภาพในการแสดงความคิดเห็นหรือแสดงออก
factor - a fact or situation which influences the result of something ปัจจัย
intraregional trade - the buying and selling of goods within a region
encouraged - having more confidence or hope about something มีกำลังใจ
X compensate for Y - X to replace or make up for Y which is low
demand - consumers needing or wanting to buy goods and services
Financial linkages should be strengthened to help guard against global imbalances and volatility, he said.
Mr Thirachai said a global rebalancing will lead to many new risks, including currency, settlement, market and legal risks.
But without rebalancing and making fundamental changes in macroeconomic policies, the pre-crisis distortions will build up once again causing a new crisis in the future.
No matter what direction the adjustment takes, challenges in terms of risk management remain," he said.
linkages - connections,
ways that two things are tied together or connected together
financial linkages - ways that two economies are tied together or connected financially (through lending or investments)
volatility - a measure of risk in financial markets, the degree to which asset prices swing up and down (See The Economist and glossary) อัตราความเสี่ยงต่อการลงทุนทางการเงิน
global rebalancing - when the global imbalances suddenly come into balance through sudden dislocating changes in the world economy
currency - a widely used the money accepted for exchange of goods in an economy เงินตรา (See Wikipedia)
settlement - completion of a buy-sell deal or transaction (money exchanged for asset)
settlement risks - the risk that one side in a buy-sell deal will not be able to do what they promised
fundamental - very important and essential พื้นฐาน รากฐานที่สำคัญ
macroeconomics - the study of how whole economies work and function (See Wikipedia)
macroeconomic policies - the plan and actions taken by a government to guide the whole economy
distortions - conditions that are not right or what they should be (examples: economic distortions, distortions of your face in the mirror)
build up - become greater and greater
no matter what Y - Y is not important (for the future event I am talking about)
adjustment - change
challenges - things that are difficult and will take great skill and effort to complete
X in terms of Y - X involving or measured by Y
financial linkages - ways that two economies are tied together or connected financially (through lending or investments)
volatility - a measure of risk in financial markets, the degree to which asset prices swing up and down (See The Economist and glossary) อัตราความเสี่ยงต่อการลงทุนทางการเงิน
global rebalancing - when the global imbalances suddenly come into balance through sudden dislocating changes in the world economy
currency - a widely used the money accepted for exchange of goods in an economy เงินตรา (See Wikipedia)
settlement - completion of a buy-sell deal or transaction (money exchanged for asset)
settlement risks - the risk that one side in a buy-sell deal will not be able to do what they promised
fundamental - very important and essential พื้นฐาน รากฐานที่สำคัญ
macroeconomics - the study of how whole economies work and function (See Wikipedia)
macroeconomic policies - the plan and actions taken by a government to guide the whole economy
distortions - conditions that are not right or what they should be (examples: economic distortions, distortions of your face in the mirror)
build up - become greater and greater
no matter what Y - Y is not important (for the future event I am talking about)
adjustment - change
challenges - things that are difficult and will take great skill and effort to complete
X in terms of Y - X involving or measured by Y
Risk managers must be responsible for not only monitoring these risks, they also have to be able to imagine what other people do not think, be afraid of what others are not afraid of, and dare to speak out about what others dare not.
The SEC itself was carefully monitoring fund flows and activity in the Thai capital market, given the volatility in the global markets and local political uncertainties, he said.
monitoring
- regularly checking an ongoing activity or process (to check for
problems or collect information) จับตาดู
dare to speak out - are brave enough or have enough courage to say something about a problem
fund - money gathered together for some purpose such as investment กองทุน
capital - money invested in a business
capital market - a market where stocks, bonds or other financial securities are bought and sold
local - in or related to the area that you live, or to the particular area that you are talking about ท้องถิ่น
political uncertainties - situation when people do not what will happen next in politics
dare to speak out - are brave enough or have enough courage to say something about a problem
fund - money gathered together for some purpose such as investment กองทุน
capital - money invested in a business
capital market - a market where stocks, bonds or other financial securities are bought and sold
local - in or related to the area that you live, or to the particular area that you are talking about ท้องถิ่น
political uncertainties - situation when people do not what will happen next in politics
(Source: 2010 a tough year for risk managers, More crises loom amid imbalances, 17/02/2010, link)
