Hence it seems urgent for the financial industry to improve its risk management practices and the transparency in this respect. These characteristics, coupled with inadequate pricing and valuation, were at the heart of the present liquidity turbulences, implying a high degree of uncertainty about the size and location of the risks in the securities market.
Another key issue of concern is related to the respective responsibility of credit rating agencies and professional investors. Banks appear to have outsourced a significant part of their risk assessment and due diligence to rating agencies and credit scoring programs.