The Essentials of Risk Management, Second Edition, 2nd Edition

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BANKS AND THEIR REGULATORS: THE POST-CRISIS REGULATORY FRAMEWORK

In this chapter we move on from our earlier discussion of corporate risk management to look at the special case of bank risk management and regulation, partly because it is so important in itself, especially after the near collapse of the world financial system following the 2007–2009 financial crisis and subsequent sovereign debt crises, and partly because bank risk management techniques have had a huge influence on the more general world of financial risk management in all sectors of the economy.

There is little disagreement over the fact that banks are special entities and require tight risk management standards and regulation. Box 3-1 describes why in more detail. How this ...