Here Theyt Be Dragons

thanks to Kaushik Gala for pointing out this article in the New York Times. If the Times would stick to reporting like this it would again be worthy to call itself a great paper.
The article on risk management by Joe Nocera is a superb description of the failure of Wall Street leadership to protect shareholders and investors. CEO's on wall street firms are almost always salesmen with a commanding presence and compelling optimism rather than knowledge workers with a deep understanding of the strengths and weaknesses of product offerings.
The Times article is 10 pages and I urge you to read it all.

Given the calamity that has since occurred, there has been a great deal
of talk, even in quant circles, that this widespread institutional
reliance on VaR was a terrible mistake. At the very least, the risks
that VaR measured did not include the biggest risk of all: the
possibility of a financial meltdown. “Risk modeling didn’t help as much
as it should have,” says Aaron Brown, a former risk manager at Morgan Stanley
who now works at AQR, a big quant-oriented hedge fund. A risk
consultant named Marc Groz says, “VaR is a very limited tool.” David
Einhorn, who founded Greenlight Capital, a prominent hedge fund, wrote
not long ago that VaR was “relatively useless as a risk-management tool
and potentially catastrophic when its use creates a false sense of
security among senior managers and watchdogs. This is like an air bag
that works all the time, except when you have a car accident.” Nassim
Nicholas Taleb, the best-selling author of “The Black Swan,” has
crusaded against VaR for more than a decade. He calls it, flatly, “a
fraud.”