Excessive risk-taking in the financial sector, poor corporate governance and inadequate regulation and enforcement led to the financial crisis since, concludes an anthology* of expert opinion on the current crisis. The book gives thoughts and recommendations on how to avoid similar meltdowns in the future.

The book published by SimCorp StrategyLab gives suggestions as to why the financial crisis happened. Contributors to the publication included senior practitioners from financial institutions and senior scholars from leading business schools and universities.

The anthology reflects the experience, research and thought leadership from experts, specialists and practitioners within various disciplines including finance, economics, mathematics, risk, governance, compliance, IT and regulation among others. It also includes interviews with executives from financial institutions including Deutsche Bank, Allianz SE; and ATP, one of Europe's largest public pension funds.

The book suggests if the cash flows from a product cannot be calculated in a relatively straightforward way, the product should not be traded. Other contributors said the proposed reforms to reduce the risk of global banking crises by national and international groups constitute an incomplete reform agenda.

The use of mathematical models in risk management is discussed. The book argues these can be used to create scenarios that allow better understanding.

The question of best-of-breed versus integrated solutions is discussed, concluding that no matter which operating model investment managers have, they should have a core data master as part of the enterprise architecture to meet strategic challenges.

On governance the book demonstrates how boards of banks receiving bailout money were more, rather than less, independent than those of other banks. Independence, concluded the publication, is no guarantee of effective risk management.

The book also suggests how information technology can strengthen emerging practices in governance, risk and compliance.

The issue of reputational risk is addressed. Contributors argue that financial institutions are particularly vulnerable to reputation risk because they depend so much on confidence.

SimCorp StrategyLab is a private research institution focusing on identifying, understanding and suggesting solutions to issues pertaining to mitigating risk, reducing cost and enabling growth in the investment management industry.

* Understanding the financial crisis: Investment, risk and governance, 229-pages, SimCorp StrategyLab. This is the first volume in a series of three.