In January 2008, a global financial institution reported a $7 billion loss that occurred when unauthorized trading positions were closed. This incident raised questions about the bank's control procedures, particularly when an internal report concluded that bank officials failed to follow up on many warnings about questionable trades.

These substantial losses are yet another reminder that there are severe penalties if the largest risk exposures are not identified timely, properly monitored and managed effectively. This issue of The Bulletin offers approaches for improving transparency into an entity’s most significant risk exposures, with the objective of minimizing the risk of unwanted surprises.