Tomorrow's Risk Management: How behavioral economics, cognitive studies and complexity science add up to more than their own sum
The recent financial crisis has highlighted many failures in traditional economics’ attempt to explain the workings of financial markets. Fortunately, the past 10 to 15 years have been witness to promising developments in related fields that have shed significant light on how markets really behave. This paper examines advancements in Behavioral Economics, Cognitive Studies of the human brain, and the science of Complex Adaptive Systems as they apply to financial services and risk management.

An important characteristic of these new approaches is that, unlike the traditional economic approaches, they all incorporate a realistic assessment of human interactions, natural biases and dynamics. Further, their results are much more in line with what we observe in real markets and real economies.

We conclude with practical lessons to improve financial risk management.
 

The Hedge Fund of Tomorrow: Building an Enduring Firm
The hedge fund industry is facing a transformational crisis. The industry must address key shortcomings in its business and operating models in order to position itself as the future of active asset management. Hedge fund assets will reach almost $2.6 trillion by the end of 2013, after reaching their low point in 2009, according to The Bank of New York Mellon & Casey Quirk's third study of leading institutional investors, investment consultants and hedge funds released today.

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