JapanRisk Comment

Japan seems poised between two paths. Option number one would mean that the nation achieves what it has not been able to do convincingly for nearly a decade now – reform the way it handles credit risk measurement and management throughout its entire economy. Option number two is to keep muddling along, with politicians implementing stop-gap measures designed to stave off the inevitable.
This is certainly a scenario where fortune would favour the bold. The right moves on the part of the Japanese government could avert disaster and put the country on the path to recovery. A failure to act could result in a repeat of the nation’s “lost decade” of the 1990s. Either way, the credit risk industry stands to profit – by playing a part in cleaning up credit messes, or helping implement new risk measurement and management systems.


In this special issue, JapanRisk, the staff of AsiaRisk look at the entire credit risk picture. Contributing editor Melvyn Westlake travelled to Tokyo to write a trilogy of articles on the subject. The first piece looks at the fundamentals that are driving the overall credit risk deterioration and how this could play out over the longer term. Then he turns his attention to the subjects of securitisation and credit derivatives, to examine how these tools are being used in Japan to help banks put their books to rights.
Furthermore, AsiaRisk deputy editor Nick Sawyer looks at the internet-based derivatives and foreign exchange trading platforms that are springing up across Tokyo, and how the unprecedented access and transparency that these will bring to the markets will help boost the use of those products.
The Risk Waters Group hopes that this will be the first of many new products – both from the editorial and the conference division – geared towards the needs of Japan’s risk management community.