Risk management was an explosive issue in 2009. All companies were called on to better manage and even predict risk at all levels. The Basel II capital accords offer three forms of risk that banks have to be attuned to.

Operational risks refer to the potential for losses that stem from people or systems. That was a front-burner issue through out the year. The Jerome Kerviel affair focused lots of attention on it. We've certainly discussed the whole idea of rogue employees. But credit risks and market risks cannot be discounted, even by non-financial firms. Let's face it, the seized-up credit markets--the commercial paper market, for example--hit lots of companies hard. That brought the threat of bankruptcy into play, which was reflected in the credit and credit derivatives markets.

It may be that the worst of the crisis is behind us. But still, a good risk management system would walk through the scenarios by which these three areas of risk can be managed and mitigated if need be. 

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