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1 - Systemic Risk Information Requirements: Current Environment, Needs, and Approaches for Development

from PART I - DATA: THE PREREQUISITE FOR MANAGING SYSTEMIC RISK

Published online by Cambridge University Press:  05 June 2013

Edward T. Hida II
Affiliation:
One World Financial Center, New York
Jean-Pierre Fouque
Affiliation:
University of California, Santa Barbara
Joseph A. Langsam
Affiliation:
University of Maryland, College Park
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Summary

Abstract This chapter begins by describing the current financial information processing environment in a typical financial services firm. Then it points to the many places in this environment where data of value for systemic risk assessment can be found. This leads to an assessment of the data elements that are likely to be found with moderate ease and those that will likely be more difficult to obtain. These will be compared with the data collection mandates being undertaken by the systemic risk regulator and financial market utilities. This assessment of disparate data will set the stage for a discussion of data integration in later chapters of this Part.

Introduction

The global financial crisis highlighted the need for greater availability and transparency of standardized information to assess and monitor systemic risk. During the crisis, regulators and others needed timely information to monitor the health of financial firms, understand their exposures, and assess concentrations and interconnections between firms and within markets. This information was not always readily available. As a result, there has been an intensifying focus on information related to systemic risk oversight.

Systemic risk oversight looks at the risks to the overall financial system and the interactions between financial institutions and between markets. Such oversight has the potential to broaden the regulatory view from the traditional “microprudential” focus on individual institutions to a broader “macroprudential” focus on the financial system and on the potential for contagion in the financial system.

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Chapter
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Publisher: Cambridge University Press
Print publication year: 2013

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