Technical Capabilities Necessary for Regulation of Systemic Financial Risk Summary of a Workshop (2010) / Chapter Skim
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1 Introduction and Major Outcomes of the Workshop
1 Introduction and Major Outcomes of the Workshop
Pages 1-3
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Because every systemic event is unique with respect to its specific pathology -- the various triggers and the propagation of effects -- the workshop focused on the issues listed above for systemic risk in general rather than for any specific scenario. Thus, by design, the workshop explicitly addressed neither the causes of the current crisis nor policy options for reducing risk, and it attempted to steer clear of some policy issues altogether (such as how to allocate new supervisory responsibilities)
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Christine Cumming of the Federal Reserve Bank of New York added that risk at the firm level cannot be truly assessed unless the much broader context of overall risk positions and risk dynamics in the financial system is understood. Decision makers at financial institutions, given access to more reliable knowledge about their total risk exposure with respect to proposed actions, should be better able to manage those risks.
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From page 3... ...
• A new understanding of systemic risk management is just beginning to develop. Inevitably, systemic risk management capabilities will be built up iteratively, starting with the imperfect data and models that are currently available and refining both as research improves our understanding.
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