Likewise, risk managers or officers in failing institutions for the most part claimed that risk management and stress testing systems in place for thousands of trading positions were under control, despite the mind-boggling complexity of the problem, and CRAs gave favorable ratings to collateralize debt obligations (CDOs), mortgage backed securities (MBSs) and assets backed securities (ABSs) that turned out to be very risky. The second narrative, “cognitive failure”, is also consistent with microeconomic models of human behavior, but calls for a deeper level of explanation that accounts for the formation of references and beliefs held by financial executives and market participants. In the applied sense, the concept of strategic risk management is reflected in the International Organization for Standardization (ISO) recommendations. In this case, risk management is defined as coordinated activities to direct and control an organization with regards to risk [ CITATION Wie14 \l 1033 ] . According to [ CITATION Far92 \l 1033 ], As a distinct management discipline, the concept of risk management as a theoretical basis for handling risk first became evident in the UK some after the second world war. Its development into a defined role and practical application came later. It has developed from two planes or directions:
(1) The expansion of the role of insurance buyer into that of risk manager and the creation of a recognized discipline; (2) The educational need to improve the intellectual and practical capability of today’s and tomorrow’s manager, which the second is a direct product of the former. 2.1.2 Tools or Techniques of Risk Management During the last decade, a major surge of interest arose in improving our ability to deal with uncertainty, most notably with its negative impact at the organizational level. This has led to the development and application of tools, techniques, and methodologies which are classified under the label of risk management. From a comprehensive survey that was conducted with the aid of the librarian of the Standard Institute of Israel, Nine standards were identified consisting of six national or international standards that were developed or adopted by standardization bodies, and three standard that were developed by professional organizations with an interest in risk management, which were published recently with the earlier publication on 1997. Included are the various standards that were identified; Institute of Electrical and Electronic Engineers, USA (2001), International Electrochemical Commission, Switzerland (2001), Japanese Standards Association (2001), Standard Australia/ Standard New Zealand (2004), British Standard Institution (BSI) (2000), Canadian Standards Association (CSA) (1997), Association for Project Management (APM)UK,(2004) and Project Management Institute, USA (2004).
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