Consequences of the Financial Market Crisis for Risk Management in Property Finance

Manfred Salber und Frank Stöfer

Over the last few years, the management of risk in property finance has advanced rapidly in line with the developments in risk management throughout the financial industry.
Regulatory requirements under the Basel II framework have played a decisive part in determining the specific demands upon methods and procedures applied in modern-day risk management.
And yet the financial market crisis, which is rampant since July 00, has brought the global banking world subprime losses totaling billions of US dollars, showing in the process that most risk management systems were not in a position to prevent these events from happening. The lessons that may be, or that remain to be learned from this are the subject of this article.