More Safeguards Needed in Asian Economies, Says Expert.

Jul. 25--Asian countries need to build up more "dynamic risk protection" as an insurance policy against future crises, according to Myron Scholes.

Dr Scholes, a 1997 Nobel laureate in economics for his work on derivative pricing, said the damage incurred by Asian countries over the course of the recent economic crisis reflected in part poor risk management and diversification.

Yet even major countries face difficulties in identifying and guarding against risks, he said.

"Countries that are in a bubble sometimes don't even know they are in one until a crash," Dr Scholes said yesterday on the sidelines of the 2001 Asia Pacific Finance Association conference.

The four-day conference, under the theme "Rebuilding our Financial Architecture", is sponsored by the Sasin Graduate Institute of Business Administration and the Faculty of Commerce and Accountancy of Chulalongkorn University.

Dr Scholes said one lesson learnt over the past few years was the speed at which liquidity and asset prices move in the financial markets.

"In Thailand's case, for instance, it is difficult to take all the buildings which companies had invested in and turn it back into putty quickly," he said.