Supervisory challenges in the presence of systemic risk: The IAIS response to the current financial crisis

Daniel M. Hofmann and John Maroney

Journal of Risk Management in Financial Institutions, 2013, vol. 6, issue 2, 137-150

Abstract: The current financial crisis has called for a reassessment of financial sector supervision. On top of the agenda is the identification of those institutions whose failure could cause systemic cascade effects with adverse impacts for the whole financial system and the real economy. These institutions will be subjected to higher capital requirement, intensified supervisory scrutiny and pre-defined resolution regimes. The IAIS as the global standard setter for insurance supervision has taken up these challenges and responded swiftly and comprehensively. The association developed the theoretical foundations to assess insurers in the context of financial stability, the methodology to identify systemically important insurers with global reach, policy measures, to appropriately deal with insurers deemed to be systemically relevant and a framework for macroprudential policy and surveillance. In all areas the IAIS navigated in uncharted waters, developing methodologies, policies and frameworks from scratch, while ensuring that the specifics of both the insurance business model and the insurance balance sheet were properly reflected. The challenges must also be taken up by financial firms. Risk management will have to broaden its scope to capture the build-up of system-wide risk that might endanger the viability of individual institutions.

Keywords: capital requirements; financial crisis; IAIS; macroprudential surveillance; resolution regimes; systemic risk (search for similar items in EconPapers)
JEL-codes: E5 G2 (search for similar items in EconPapers)
Date: 2013
References: Add references at CitEc
Citations:

Downloads: (external link)
https://hstalks.com/article/2918/download/ (application/pdf)
https://hstalks.com/article/2918/ (text/html)
Requires a paid subscription for full access.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aza:rmfi00:y:2013:v:6:i:2:p:137-150

Access Statistics for this article

More articles in Journal of Risk Management in Financial Institutions from Henry Stewart Publications
Bibliographic data for series maintained by Henry Stewart Talks ().