Banking organization proposes stronger risk focus.
According to the IIF's report, the world's banks and other financial institutions must "clean their houses first" to restore public confidence in them, rather than leaving the task to regulators. Along these lines, the report recommends banks establish better governance practices and build a stronger risk culture. "Risk management is much more than just a monitoring function," says Richard Waugh, president and chief executive officer (CEO) of Scotiabank in Toronto and co-chair of the IIF's Committee on Market Best Practices, which wrote the report. "It is a core responsibility of the CEO and all executive management. Firms need to build risk management into their overall business strategies."
The SEC's report, Observations on Risk Management Practices During the Recent Market Turbulence, also highlights senior management's oversight role in assessing and responding to the changing risk landscape. The report, which was produced in collaboration with regulators from Frances, Germany, Switzerland, and the United Kingdom, identifies such oversight as one of three practices that may have helped firms weather the financial market turmoil through the end of 2007. The second practice is the effectiveness of market and credit risk management practies in understanding and managing the risks in retained or traded exposures. The third practice is the effectiveness of liquidity risk management practices in assessing vulnerability to this type of this in a stressed environment and taking appropriate action to mitigate it.
The IIF's interim report on market best practices is available from the IIF Web site at www.iif.com. To obtain the SEC report on current risk management practices, visit the SEC's Web site at www.sec.gov.
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|Title Annotation:||UPDATE; Institute of International Finance|
|Date:||Jun 1, 2008|
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