A risk consultant is preparing a presentation to a group of junior risk managers on the lessons learned from historical financial disasters and failures of risk management at large financial firms. Which of the following correctly describes a lesson learned from the given financial disaster case?

Exam-Like

The Orange County case emphasizes the importance of fully understanding complex derivative contracts before entering into them.

The London Whale case emphasizes the importance of considering the fact that correlations can increase sharply during a global financial crisis.

The Northern Rock case emphasizes the importance of having a strong cybersecurity framework.

The LTCM case emphasizes the importance of meeting regulatory capital requirements.

Financial Risk Manager Part 1