1. Global Economic Crises
Capitalism, an economic system whereby land, labor, production, pricing and distribution are all determined by the market, has a history of moving from extended periods of rapid growth to relatively shorter periods of contraction. The ongoing Global Financial Crisis actually has its roots in the closing years of the 20 th century when U.S. housing prices, after an uninterrupted, multi-year escalation, began declining. By mid-2008, there was an almost striking increase in mortgage delinquencies. This increase in delinquencies was followed by an alarming loss in value of securities backed with housing mortgages. And, this alarming loss in value meant an equally alarming decline in the capital of America's largest banks and trillion- dollar government-backed mortgage lenders (like Freddie Mac and Fannie Mae; the government-backed mortgage lenders hold some $5 trillion in mortgage-backed securities).

2. Operational Risks
Because the global economic crisis was triggered by skyrocketing sub- prime mortgage foreclosures and subsequent bank lending limitations, financial risks are the primary focus of this subsection followed by a brief discussion of trading operational risks.

3. Financial Risks
Financial risks are divided into the following risk categories: capital costs, currency translation, liquidity, commodities, capital availability, and credit ratings. Following is a summary of the major events that have transpired under each financial risk category

4. Capital Costs
Because commercial banks are fearful of lending to high-risk entities, U.S. junk bonds are now trading at more than 14 percentage points above comparable U.S. Treasury bonds relative to a spread of less than 6 percentage points in September Companies such as Texas-based El Paso Corp., one of the largest U.S. natural gas producers, were recently charged a percent interest rate to borrow US $500 million for five years. As a result, delaying near-term growth plans may be an appropriate strategy for companies with junk bond status given exorbitant capital costs.

5. Liquidity Risks
Participants at KPMG's 2008 Audit Committee Round tables III reported that liquidity risks were their top risk concern. This is especially true for commercial banks and insurance companies as stock sales satisfy about 20 percent of their liquidity needs. The remainder of their liquidity needs normally come from short-term borrowings and commercial paper, two options that are currently limited.