Risk Management Through the Lens of Macroprudential Policy
Journal of Risk Management in Financial Institutions, Vol. 6, No. 2, pp. 120-128, 2013
9 Pages Posted: 22 Apr 2013
Date Written: March 14, 2013
Before the beginning of the crisis in 2007–8, regulation failed to cope with the complexities of modern finance and paid insufficient attention to systemic risk. Similarly, risk managers in financial institutions tended to focus on risks in their financial institutions, neglecting systemic risk. Regulators worldwide are now addressing these deficiencies. One important dimension of regulatory reform is the creation of macroprudential authorities, such as the European Systemic Risk Board (ESRB), specifically tasked to focus on systemic risk. To address such risks, the ESRB has issued recommendations that will influence the behaviour of financial institutions. Work is ongoing to develop fully fledged macroprudential policies, which in combination with other regulation will help prevent or mitigate future crises.
Keywords: Financial stability, systemic risk, macroprudential policy, risk management
JEL Classification: E44, G15, G18, G20
Suggested Citation: Suggested Citation