The Principles of Banking, 2nd Edition

PART VPrinciples of Risk Management and Regulation

In the first edition of the book we covered much of the risk management and regulation topics in Part I. In this second edition, this topic, which occupies more chapters than any other part of the book, has been moved to the end of the book (with the exception of the website details chapter). There is no specific reason for this, although possibly in his sub-conscious the author, realising that the subjects covered herein are slightly drier than all the other topics, didn't want to put readers off by presenting the more turgid material at the start.

Lack of excitement notwithstanding, it cannot be denied that regulatory compliance, and meeting the needs of the supervisor occupies more senior management time than any other activity they undertake. There are whole teams of people in banks that are engaged solely in reading, interpreting and disseminating the publications of the various regulatory bodies, be it their national regulatory authority, the Basel Committee, the EBA, and so on. We're not sure what they call it in other jurisdictions but in the UK it's called “Horizon Scanning”. It is very unusual for one week to pass by and there not be an announcement, publication or Policy Statement issued.

Part V is therefore vital reading for everyone involved in any aspects of banking. Regulation is onerous and prescriptive, and Boards, Excos and ALCOs must ensure they are up-to-date on all aspects of it relevant to the bank they ...