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the use of high–risk lending strategies and the growing use of
securitization in the financial sector. Fundamental to risk management is
information: argued that “if corporate leaders, portfolio managers and
regulators want to make good riskbased decisions, they need to have the

right data, and they need to have the right framework to be able to
analyze the data” (Lo, 2009, p. 57). An analysis of the international
economic environment in the time leading up to crisis makes it clear that

both of these factors – right data and the right analysis framework –
were clearly lacking. As a result, risk management was poor.
It has been argued that traditional financial risk management
models do not reflect the reality of the present day situation in which

international financial markets are closely interconnected (Sen, n.d.).
This suggests a need to consider a much wider range of information
when developing financial strategies, including not only the quantitative

data traditionally used in economic and financial forecasting, but
qualitative information about worldwide economic and social trends and
other factors likely to influence markets, borrowing behavior, and other

variables. This might include, for example, qualitative risk assessments
based on the views of financial experts (Bankersonline.com, 2008),
social and demographic data on types of borrowers and their lifestyles

that will help banks to predict the likelihood of default on loans (Rajan,
Seru & Vig, 2008), or the type of “global risk map” recommended by an
expert commission working for the German government (Braasch,
2009).

There is also evidence that organizations had inadequate systems
for assessing risk in the years leading up to the onset of economic crisis.
For example, in a 2002 survey, 43% of corporate directors reported that

their company had no risk management process, or one that was felt to
be ineffective. More than a third (36%) indicated that they did not fully
understand the risks faced by their organization (cited in Bainbridge,
2009).

Not only was adequate information or information systems not
readily available to actors in the financial markets at the time of the
crisis, but there was also a severe lack of information transparency, as

banks are reluctant to share data about their lending portfolios. The
OECD program on Public Management and Governance (PUMA)
includes “transparency and open information systems” as one of the six

main factors which define good governance.