In the Eye of the Beholder: Regulatory Versus Industry Risk Perception

Journal of Risk Management in Financial Institutions, Forthcoming

19 Pages Posted: 18 May 2020

See all articles by Meghan Burns

Meghan Burns

Financial Industry Regulatory Authority (FINRA)

Dror Y. Kenett

Financial Industry Regulatory Authority (FINRA); Johns Hopkins University

Jonathan S. Sokobin

FINRA

Date Written: April 21, 2020

Abstract

Is the perception of risk, as outlined and defined by the regulatory and supervisory community, shared by private financial institutions? In this paper we assess a representative sample of recent publicly available risk perspectives and outlooks, and study similarities and differences. We find that for established (traditional) risk themes there is relatively greater consensus between regulators and industry participants. However, for emerging risk themes, we find a divergence in perspectives between industry and regulators and, at times, even within each group. We discuss this spectrum of risk perspectives, as well as approaches to mitigate the resulting “risk-gap” between the regulators and the industry.

Keywords: Risk Themes, Risk Gap, Risk Disclosures, Regulation

JEL Classification: G18, G32, H11

Suggested Citation

Burns, Meghan and Kenett, Dror Y. and Sokobin, Jonathan, In the Eye of the Beholder: Regulatory Versus Industry Risk Perception (April 21, 2020). Journal of Risk Management in Financial Institutions, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3581684 or http://dx.doi.org/10.2139/ssrn.3581684

Meghan Burns

Financial Industry Regulatory Authority (FINRA)

Washington, DC
United States

Dror Y. Kenett (Contact Author)

Financial Industry Regulatory Authority (FINRA) ( email )

Washington, DC
United States

Johns Hopkins University ( email )

Baltimore, MD 20036-1984
United States

Jonathan Sokobin

FINRA ( email )

1735 K Street NW
Washington, DC 20006-1506
United States
(202) 728-8248 (Phone)
(301) 527-4809 (Fax)

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
19
Abstract Views
217
PlumX Metrics