Addressing Risk Challenges in a Changing Financial Environment:the Need for Greater Accountability in Financial Regulation and Risk Management

The need for continuous monitoring and regulation is particularly attributed to, and justified by, the inevitable presence of risks and uncertainty – both in terms of certain externalities and indeterminacies which are capable of being reasonably quantified and those which are not. Amongst other goals, this paper aims to address complexities and challenges faced by regulators in identifying and assessing risk, problems arising from different perceptions of risk, and solutions aimed at countering problems of risk regulation. It will approach these issues through an assessment of explanations put forward to justify the growing importance of risks, well known risk theories such as cultural theory, risk society theory and governmentality theory. “Socio cultural” explanations which relate to how risk is increasingly becoming embedded in organisations and institutions will also be considered as part of those factors attributable to why the financial environment has become transformed to the state in which it currently exists. A consideration of regulatory developments which have contributed to a change in the way financial regulation is carried out, as well as developments which have contributed to the de formalisation of rules and a corresponding “loss of certainty”, will also constitute focal points of the paper. To what extent are risks capable of being quantified? Who is able to assist with such quantification – and why has it become necessary to introduce other regulatory actors and greater measures aimed at fostering corporate governance and accountability into the regulatory process? These questions constitute some of the issues which this paper aims to address

Focusing on the Few: the Role of Large Taxpayer Units in the Revenue Strategies of Developing Countries

Part I of this paper first reviews the spread of LTUs, and briefly describes the experience of LTUs in a few selected countries. This section takes up the question of the LTU as an enclave administrative reform versus semi-autonomous revenue agencies and "whole of government" reform involving broad based wages, human resources planning and anti-corruption measures.Part II examines the emergence of the LTU and its relationships to the remainder of the tax administration system in different kinds of developing and transition economies, such as (i)capable developing states, (ii) administratively weak but governance improving states, and (iii)captured states. The relative success of LTUs can improve our understanding of the enclave approach to governance reforms as well as yielding insights that are intrinsic to the challenge of improving revenue mobilization. LTUs and their roles in developing country economies can also be interpreted through the prism of recent revisionist writings on best policies for the tax mix in the presence of a major informal sector and a government sector with a highly constrained taxing capacity and high vulnerability to corruption.Working Paper Number 04-44

Financial Regulation and Risk Management:Addressing Risk Challenges in a Changing Financial Environment

Amongst other goals, this paper aims to address complexities and challenges faced by regulators in identifying and assessing risk, problems arising from different perceptions of risk, and solutions aimed at countering problems of risk regulation. It will approach these issues through an assessment of explanations put forward to justify the growing importance of risks, well known risk theories such as cultural theory, risk society theory and governmentality theory. In addressing the problems posed as a result of the difficulty in quantifying risks, it will consider means whereby risks can be quantified reasonably without the consequential effects which result from the dual nature of risk, that is, risks emanating from the management of institutional risks. “Socio cultural” explanations which relate to how risk is increasingly becoming embedded in organisations and institutions will also be considered as part of those factors attributable to why the financial environment has become transformed to the state in which it currently exists. A consideration of regulatory developments which have contributed to a change in the way financial regulation is carried out, an illustration of how the financial industry and the approach to financial regulation have been transformed by the rapid growth of the hedge funds industry, will also constitute focal points of the paper

Rettung durch Regulierung? Eckpunkte des Liikanen-Berichts

This paper summarizes the key proposals of the report by the Liikanen Commission. It starts with an explanation of a crisis narrative underlying the Report and its proposals. The proposals aim for a revitalization of market discipline in financial markets. The two main structural proposals of the Liikanen Report are: first, for large banks, the separation of the trading business from other parts of the banking business (the "Separation Proposal"), and the mandatory issuing of subordinated bank debt thought to be liable (the strict "Bail-in Proposal"). The credibility of this commitment to private liability is achieved by strict holding restrictions. The anticipated consequences of the introduction of these structural regulations for the financial industry and markets are addressed in a concluding part.Ausgehend von einer Erläuterung der Kriseninterpretation (crisis narrative), wie sie in dem Bericht der Liikanen-Kommission zugrunde liegt, werden die nach Ansicht des Verfassers zentralen Vorschläge des Kommissionsberichts ausgewählt, vorgestellt und in den größeren Rahmen einer erneuerten Ordnungspolitik für die Finanzmärkte Europas eingeordnet. Die mit den Vorschlägen eng zusammenhängenden Reformelemente der Bankenunion werden in diesem Text bewusst ausgeklammert. Die beiden zentralen Strukturvorschläge des Liikanen-Berichts betreffen die Abspaltung der Handelsgeschäfte von dem Universalbankengeschäft für große, internationale Banken (der Trennbankenvorschlag), sowie die verpflichtende Emission nachrangigen, glaubwürdig haftenden Fremdkapitals (der strenge Bail-in Vorschlag). Glaubwürdigkeit der Haftungszusage wird durch strenge Halterestriktionen erreicht. Vorhersehbare Folgerungen einer Einführung dieser Strukturregeln für die Finanzindustrie und -märkte werden in einem abschließenden Teil angesprochen

Addressing risk challenges in a changing financial environment: the need for greater accountability in financial regulation and risk management

The need for continuous monitoring and regulation is particularly attributed to, and justified by, the inevitable presence of risks and uncertainty – both in terms of certain externalities and indeterminacies which are capable of being reasonably quantified and those which are not. Amongst other goals, this paper aims to address complexities and challenges faced by regulators in identifying and assessing risk, problems arising from different perceptions of risk, and solutions aimed at countering problems of risk regulation. It will approach these issues through an assessment of explanations put forward to justify the growing importance of risks, well known risk theories such as cultural theory, risk society theory and governmentality theory. “Socio cultural” explanations which relate to how risk is increasingly becoming embedded in organisations and institutions will also be considered as part of those factors attributable to why the financial environment has become transformed to the state in which it currently exists. A consideration of regulatory developments which have contributed to a change in the way financial regulation is carried out, as well as developments which have contributed to the de formalisation of rules and a corresponding “loss of certainty”, will also constitute focal points of the paper. To what extent are risks capable of being quantified? Who is able to assist with such quantification –and why has it become necessary to introduce other regulatory actors and greater measures aimed at fostering corporate governance and accountability into the regulatory process? These questions constitute some of the issues which this paper aims to address.risk; financial; regulation; audit; governmentality theory; risk society; cultural theory; hedge funds; uncertainty; legal theory; accountability

Financial regulation and risk management: addressing risk challenges in a changing financial environment

Amongst other goals, this paper aims to address complexities and challenges faced by regulators in identifying and assessing risk, problems arising from different perceptions of risk, and solutions aimed at countering problems of risk regulation. It will approach these issues through an assessment of explanations put forward to justify the growing importance of risks, well known risk theories such as cultural theory, risk society theory and governmentality theory. In addressing the problems posed as a result of the difficulty in quantifying risks, it will consider means whereby risks can be quantified reasonably without the consequential effects which result from the dual nature of risk, that is, risks emanating from the management of institutional risks. “Socio cultural” explanations which relate to how risk is increasingly becoming embedded in organisations and institutions will also be considered as part of those factors attributable to why the financial environment has become transformed to the state in which it currently exists. A consideration of regulatory developments which have contributed to a change in the way financial regulation is carried out, an illustration of how the financial industry and the approach to financial regulation have been transformed by the rapid growth of the hedge funds industry, will also constitute focal points of the paper.risk; regulation; banks; regulators; audit; financial; hedge funds; governmentality theory; risk society; cultural theory; accountability

Turning Brownfields into Jobfields

A handbook for practitioners and citizens on making brownfields development work