In the aftermath of the 2007-8 Global Financial Crisis, Andrew Haldane, Chief Economist, Bank of England in a speech entitled Why Banks Failed the Stress Test concluded that: Risk management models have during this crisis proved themselves wrong in a more fundamental sense. They failed Keynes test that it is better to be roughly right than precisely wrong. With hindsight, these models were both very precise and very wrong.

Required: Critically evaluate Haldanes statement in the context of modern risk management methods such as Value-at-Risk; the evolution in risk management since the Global Financial Crisis; and a series of high-profile rogue trader and operational risk episodes. Moreover, analyse the key lessons that can be drawn from these issues for the future of risk management.