The Essentials of Risk Management, Third Edition, 3rd Edition

3

BANKS AND THEIR REGULATORS

The Post-Crisis Regulatory Framework

In this chapter we move on from our earlier discussion of corporate risk management to look at the special case of bank risk management and regulation. This is partly because it is so important in itself, especially after the near collapse of the world financial system following the 2007–2009 global financial crisis (GFC) and subsequent sovereign debt crises. Additionally, bank risk management techniques have had a huge influence on the more general world of financial risk management in all sectors of the economy.

There is little disagreement over the fact that banks are special entities and require tight risk management standards and regulation; Box 3-1 describes why in more ...