Introduction to Risk Management
Lehman Brothers is a diversified, diversified investment bank that serves the financial
needs of global companies, institutions, governments, and investors. And it is one of
the most powerful stock and bond underwriters and traders in the world.
At the same time, the company also serves as an important financial advisor to many
multinational companies and governments around the world, and has many industries recognized
international best analysts. Since its establishment in 1850, Lehman Brothers has established
a global reputation for creating innovative products, exploring the latest financing methods,
and providing the best quality services.
In 2007, Lehman ranked 132 in the Fortune 500, with total assets
of nearly 700 billion US dollars. From September 2008, Lehman's stock
price plunged 77% within a week, and the company's market value shrank
significantly from $ 11.2 billion to $ 2.5 billion. In the first quarter,
Lehman sold one-fifth of leveraged loans, and at the same time used the
company's assets as collateral, borrowing a lot of cash to trade other
fixed-income products for customers. In the second quarter, 147 billion
US dollars of assets were sold, and large-scale layoffs were carried out
successively to reduce expenses. However, Lehman's self-help did not bring
himself out of trouble. Lehman ultimately failed to escape bankruptcy.
Affected by the subprime mortgage crisis. The subprime crisis
caused the financial products it held to become bad debts because it
was betting too much on subprime products.
Lehman Brothers entered an unfamiliar business, and it developed
too fast, and the business was too concentrated. In recent years,
although Lehman has also made progress in other business areas (mergers
and acquisitions, stock trading), it lacks the diversification of
business that other competitors have.
Lehman Brothers has too little capital and high leverage.
Investment banks represented by Lehman are different from comprehensive
banks. They had little own capital, and the capital adequacy ratio is
too low. In order to raise funds to expand their business, they have
to rely on the bond market and the inter-bank lending market; issuing
bonds in the bond market to meet the needs of medium- and long-term funds,
and inter-bank lending market through mortgage repurchase and other
methods to meet the needs of short-term funds. In other words, the company
uses very little self-owned capital and a large amount of borrowing
methods to maintain the operating capital requirements. This is the basic
principle of the leverage effect. The more borrowing and less your own
capital, the greater the leverage ratio. When making money, the gain is
magnified with leverage; but when making a loss, the loss is also magnified
Crisis awareness. The larger the enterprise, the more crisis consciousness is
Improve the company's internal management and anti-risk capabilities.
When operating an enterprise, it is necessary not only to strengthen the internal
management of the enterprise, but also to improve the survivability of the enterprise
in dilemmas. Entrepreneurs must be ready to face the dilemma that caused the enterprise