MOVIE SYPNOSIS

The Big Short is based on the true story and best-selling book of Michael Lewis. Christian Bale
plays a doctor-turned-hedge-fund-manager with ease in numbers and unease in people. The
film is a flashy, quick-witted, and, yeah, fun-film about housing and banking collapse. But maybe
it is all a bit too exciting, a little too amusing for a film that is so sobering.
In 2008, the Wall Street guru Michael Burry discovered that a lot of subprime home loans were
in danger of defaulting. Burry banks on the mortgage bubble by pouring more than $1 billion of
his customers' funds into credit default swaps. His actions drew the wrath of banker Jared
Vennett (Ryan Gosling), hedge fund expert Mark Baum (Steve Carell) and other cynical
opportunists. dTogether, these men make a profit by taking complete advantage of America's
imminent economic crisis.
The Big Short Stars Brad Pitt, Christian Bale, Ryan Gosling, Steve Carell, Finn Wittrock, Hamish
Linklater, and others. The film is a stunning and ferocious blast of righteous anger and go-for-
broke comedy. This is not McKay's coming out because it is his first movie that is not a pure
comedy. For all its big stars, its massive info-dumps and its based-on-a-true-story scale, the
film's motivations come across as intensely personal. The method he does use I will leave
unspoiled is to remind you that you are watching a recreation of events, says reviewer Tom
Charity.  In a hilarious moment that will come as a relief to sticklers for accuracy, Wittrock
pauses to inform the viewer that the scene we are watching never actually happened. That
moment pays off even further when Gosling later lets us know that a particular movie moment
actually did happen exactly as depicted. This postmodernist technique serves a purpose beyond
the meta-textual poke at screenwriting conventions. Bale's Michael Burry prefers to listen to
bands like Mastodon, Metallica and Pantera while crunching numbers. The film takes its cues
from the music, even when it is not metal, it is fiery and ferocious. The Big Short is both the
defining film about the most recent financial crisis and the defines film of its director's young
career so far, sayscom's Tom Charity. The movie is directed by Gareth Bale and written by
Michael Stuhlmann.

1. Identify the risks encountered in the movie.

The Big Short's main characters began to shorten mortgage-backed securities. They
used financial contracts called credit default swaps (CDS) offered by companies like AIG
to gamble on these CDOs. CDSs are insurance policies that allow banks and hedge
funds to cover against the possibility of CDO defaults. Dominoes ultimately collapsed
when borrowers with adjustable mortgages defaulted on their debts, cash flows to CDO
managers dried up, and bondholders lost their assets. The author compares this to
owning burglary insurance at someone else's home where you only get paid if they get
stolen.

2. What would be your immediate response given the same scenario?

The simple valuation problem is to estimate the default insurance premium, the non-
arbitrary value of the portfolio derivative at the outset of the deal. This value is supplied
by the estimated discounted derivative cash flows associated with a risk-neutral pricing
 measure. After inception, the derivative status must be marked on the exchange; that is,
the value of the derivative under existing market conditions must be calculated. The
basic hedging issue is to estimate the vulnerability of the sum of non-performing market
fluctuations due to minor changes in the constituent risks. The objective is to predict the
distribution of the cumulative cash flows of the lender over the term of the deal. The
distribution is taken as part of the real calculation representing the occurrences of
empiric probability rather than a risk-neutral pricing measure. The distribution sets out
the risk/reward profile of the portfolio derivative position and is the gateway to risk
management applications. For example, it helps the investor or regulator to decide the
amount of money needed to fund a position. The financial crash illustrates the
importance of these implementations and the issues involved with the conventional
credit-based study of portfolio credit derivative positions.

3. What internal control framework, or plan and procedure to install to avoid the
identified risks?

In my opinion, the internal control framework, or plan and procedure to install to avoid
the identified risks is the Control Objectives for Information and Related Technologies,
more popularly known as COBIT, a framework that aims to help organizations that are
looking to develop, implement, monitor, and improve IT governance and information
management. Risks in the said movie lacks monitoring and implementing rules that is
why they can do anything they want, regardless of how bad or good their decisions are.
COBIT will sets out IT governance guidelines, priorities and good practices for all IT
domains and processes. These are then related to the needs and specifications of the
company. The core structure seeks to match corporate priorities with IT. This helps IT
workers to truly grasp the priorities of the company, while also allowing C-suite and
executives to consider their IT objectives.