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
Date Written: April 21, 2020
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: Suggested Citation