The G20 summits: the outcomes for financial sector enterprise risk management
The communiqué published after yesterday's (2nd April 2009) G20 Summit in London built upon ERM-related decisions made at the November 2008 Washington G20 Summit.
Decisions taken at the Washington Summit included the following:
- Regulators should develop enhanced guidance to strengthen banks' risk management practices, in line with international best practices, and should encourage financial firms to re-examine their internal controls and implement strengthened policies for sound risk management.
- Firms should reassess their risk management models to guard against stress and report to supervisors on their efforts.
- Regulators should take all steps necessary to strengthen cross-border crisis management arrangements, including on cooperation and communication with each other and with appropriate authorities, and develop comprehensive contact lists and conduct simulation exercises, as appropriate.
The London Summit communiqué builds upon these decisions as follows, stating:
- We will take action to build a stronger, more globally consistent, supervisory and regulatory framework for the future financial sector
- We each agree to ensure our domestic regulatory systems are strong. But we also agree to establish the much greater consistency and systematic cooperation between countries, and the framework of internationally agreed high standards, that a global financial system requires. Strengthened regulation and supervision must ... guard against risk across the financial system ... and discourage excessive risk-taking.
- To this end ... In particular we agree:
- to establish a new Financial Stability Board (FSB) with a strengthened mandate, as a successor to the Financial Stability Forum (FSF), including all G20 countries, FSF members, Spain, and the European Commission
- that the FSB should collaborate with the IMF to provide early warning of macroeconomic and financial risks and the actions needed to address them
- to reshape our regulatory systems so that our authorities are able to identify and take account of macro-prudential risks
- to extend regulation and oversight to all systemically important financial institutions, instruments and markets. This will include, for the first time, systemically important hedge funds.
Read the full communiqué here.
Copyright 2009 Portal Publishing Ltd
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