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Risky business

The active management of counterparty risk is one of the most complicated and least understood of banking activities. New developments are increasing efficiencies but, at the same time, the room for error

Four years on from the onset of the credit crunch and there is a palpable sense of déjà vu in the markets. Once again uncertainty is rife, unsustainable levels of debt are raising default fears, and banks are becoming wary of lending money to each other.

But one thing is different this time. In the past four years banks have overhauled the way they manage counterparty risk.

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