And the basic risks still are credit and market risks. The same expertise banks used for old-fashioned loans and their funding is still what they do for derivatives, securitizations, and credit scoring. That having been said, however, one must quickly add that the new instruments and procedures raise real questions about both managing and supervising risk by instruments and/or by legal entity.
Banking organizations are doing so less and less, and as a result supervisors are following suit. Banking organizations have increasingly centralized risk management at the parent as a necessity because the credit decisions cross legal entities and certainly cross instruments.