Comprehensive coverage of global financial regulation

Every year, Duff & Phelps surveys key stakeholders from a wide range of global financial institutions on the current regulatory landscape. Here we look at a case of how Canfor Corporation was affected by regulatory changes and how it overcame them. As you can see, many of the examples above can present regulatory risks that may directly affect a company’s bottom line. In some cases, the effect is not easily observable, such as with mandated vacation and sick days. Increases to minimum wage can be a critical source of regulatory risk, as they substantially impact businesses, especially if they hire large quantities of low-skilled labor. In particular, small businesses suffer greater losses due to their inability to access economies of scale.

The HSE is both a regulator in the rule-setting sense, and a “regulatory delivery” agency, conducting inspections, investigations, developing and providing guidance and advice, and co-operating intensively with the industries it supervises so as to proactively manage and reduce risks. Internationally, the HSE has long been at the forefront of innovation in regulatory delivery methods, in particular in terms of compliance promotion (through guidance, collaboration with industry, long-term engagement etc.), risk-based targeting and risk-proportional enforcement. Risk-based targeting and planning methods are mainly enabled by “Find-it” application, an IT tool developed by HSE to enhance its regulatory delivery task. In Campania, in addition to the existing GISA system to plan and manage all food safety inspections, the region partnered with the University of Naples Parthenope to develop MytiluSE, a system to predict the quality of waters so as to secure safety of mussels produced in the bay of Naples. Rather than expending large resources on ex post controls to find potential contamination, the system works pre-emptively, enabling to know which days the harvesting of mussels would be unsafe. Developing the system involved investigating the currents of the bay of Naples, mapping contamination sources, and developing a reliable predictive model, but it is potentially completely transformative for regulatory delivery.

This can also be used to provide permanent supervision of key elements of particularly high-risk objects (e.g. structural stability of hydroelectric dams). Such approaches and tools, however, also should be used in the appropriate way, acknowledging their limits and potential problems. The way their goals are devised – some stressing control of legal compliance and punishment of non-compliance, whereas others focus on risk mitigation or improvement of public welfare – are among the most ubiquitous differences. The latter aim at meeting public outcomes rather than processes and/or formal conformity. Outcome-focused regulation is another aspect of risk-based regulation – because risk is the indicator through which outcomes can be defined and measured, and thus the criterion used to prioritise actions and take decisions, rather than focusing on rigid processes.

Regulation of Financial Institutions Critical to Avoiding Spread of Global Risk,

Mr. OCAMPO said the growth of international trade was critical to the global recovery, although the significant slowdown that had taken place as a result of the crisis was not always recognized. There needed to be more research to understand how to spread the benefits of international trade to developing countries. Of course, it is important to observe that the risk management challenges faced by global banking organizations — with their ability to book and manage highly correlated risks in numerous physical locations, and their ability to transmit risk directly into the financial system — are different from those faced by global audit firms. However, as I mentioned earlier, today’s global banking organizations and audit firms are both often critically dependent on the activities occurring in multiple geographic locations.

This means that authorities need to identify qualified and competent persons from the inspected business to move ahead, and that trust is essential, since virtual inspections may give room for violations that will not be detected if operators intend to misinform inspectors. Finally, authorities need to be quite precise on what data to ask for, which elements, activities etc. should be observed and streamed, etc. The Health and Safety Executive (HSE) is a non-departmental (i.e. not directly part of the Ministry’s services, but autonomous) public body reporting to the Department for Work and Pensions with the core purpose to reduce work related injuries and ill-health. The HSE collaborates with a range of stakeholders in UK involved in health and safety and share responsibilities for regulatory control with local authorities.

Risk, Finance and Regulation

Such information is available in data systems of other inspectorates they use to conduct inspections and record inspection outcomes, and Inspection View is an integration platform which enable data exchange and horizontal co-ordination between the inspectorates. The leading idea behind the solution is that inspection and enforcement should be carried out from the perspective by government as a whole, and not by individual inspectorates. Inspection View enables national, regional and local inspectors to consult each other’s data on inspection objects, being now used by over 500 inspectors. An inspection reform towards a risk-based approach was implemented in Lithuania since 2008, which involved changes to adopt strong and legally binding instruments to inspections’ practices. The amendments to the framework law included a risk-based approach to inspections, the means to make it possible, and a balance between inspectors and inspected subjects, by foreseeing their respective rights and duties.

We actively work with you to make sense of data from multiple sources, internal and external, to identify meaningful risk signals and to form actionable, real-time risk intelligence. In doing so, we help you become more agile and resilient, better able to anticipate threats and take advantage of opportunity. As organisations grapple with urgent challenges around an increasingly volatile environment and regulatory scrutiny, and rising uncertainty of geopolitical events, in order to avoid vital operational and compliance failures, Chinese companies have to think about and implement a resilient compliance system from a global standpoint.

Key Findings

OECD iLibrary

is the online library of the Organisation for Economic Cooperation and Development (OECD) featuring its books, papers, podcasts and statistics and is the knowledge base of OECD’s analysis and data. Our Identification Policy will be strictly enforced and all candidates must comply with Pearson VUE test center rules. In Haiti, amid intensifying violence, Volker Türk, the High Commissioner for Human Rights, called for urgent action to be taken on the UN Secretary-General’s appeal for a non-United Nations multinational force to support the Haitian police in addressing the grave security situation and restoring the rule of law. This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. In carrying out its mandates, the PCAOB cooperates closely with the Securities and Exchange Commission, not only because the SEC oversees the PCAOB’s activities, but because the PCAOB and the SEC share the mutual objective of investor protection. Sign up to receive the Banking Risk and Regulation newsletter below, or visit bankingriskandreglation.com.

Recently, several jurisdictions have introduced or further developed information systems which address all or several of these requirements, in ways that correspond to the applicable context and constraints. The course was developed by risk practitioners to reflect the current international standards. The representative of Senegal questioned how future shocks could be avoided to minimise the profound negative impact on developing countries. EY Regulatory and Compliance Manager is a global, digital and fully customizable regulatory inventory that’s enriched, mapped and maintained by a combination of leading-edge technology and the global EY network of regulatory professionals. The Federal Deposit Insurance Corporation (FDIC) has outlined three potential models for deposit insurance reform in the wake of recent banking disruption. Financial institutions should review their approach to internal control functions in light of the increasing and evolving demands being placed on them, according to a new report from Deloitte.

Pinstriped bankers of yesteryear would be hard pressed to recognize their once-staid industry. Fierce competition, technological disruption, and continually shifting local and global regulations are just some Global Risk and Regulation of the challenges that banks, insurance companies and other financial services firms have to contend with. Tax policy reforms can affect the bottom line for businesses and individual investors alike.

While these developments can provide interesting ways to improve safety in sectors, where traditional “human” supervision is difficult (transportation being a prime example), they are not without downsides. As indicated in previous sections, interesting experimentations are being done or considered in a number of fields – such as environmental protection, energy networks and mining, food safety etc. In such examples, remote surveillance aims at identifying emerging harms, assessing outcomes and risks, and monitoring critical infrastructure. In the same way, remote sensors can be used to monitor strains on high-risk objects such as bridges, tunnels, or dams. When used as a tool to assess and provide early warning of risks, and cover areas, which are difficult to reach, remote surveillance appears to be a promising and precious tools.

Let’s change the way we see risk

This agreement was introduced in efforts to settle the longstanding softwood lumber dispute. Similar to the above examples, changes to mandated vacation or sick days affect a company’s bottom line as they are required to give employees more time off. In July 2018, China announced intentions to allow foreign individual investors access to A shares through domestic brokerages. HUB is here to ensure your global insurance program aligns with your organization’s multinational growth strategy. Treasury has committed to adopting the bulk of the Quality of Advice Review Recommendations, published its second consultation paper on climate disclosure and has announced its intention to uplift Superannuation Performance Testing.

The survey questions also look into the application of risk assessment and management in the COVID-19 context. In this initial pilot, the survey looks primarily at the breadth of application of risk-based approaches, i.e. at whether they exist and are applied in a given country and, if so, across all of government or only in some sector(s). Looking at the depth of implementation would require additional research work, and the chapter will only provide some snapshots of specific cases. Indeed, notwithstanding the considerable progress over time, the remain a significant implementation gap in risk-based regulation – even in some jurisdictions and regulatory areas where apparently binding legislation exists, and/or where official proclamations of being “risk-based” exist. If adequate understanding and assessment of risks, and consistent application of risk-focus and risk-proportionality, are to deliver their expected benefits in regulation, it is essential to more systematically assess the current situation, and spread best practices. Still, in spite of risk, risk-focus, risk-proportionality, and risk-management all being referenced in studies and guidance that apply or relate to specific areas of regulation4 (Khwaja, Awasthi and Loeprick, 2011[5]), there is no consolidated guidance on “risk and regulation” as such at the international level.

The Impact of Regulations on U.S. Markets

A sovereign debt restructuring mechanism remained one of the missing elements of the international financial architecture, he said. There was a push for such a mechanism following the Asian financial crisis; however, no progress was made. There was some advancement in governance, including the reform of the Bretton Woods Institutions as well as international financial regulations. The creation of the Financial Stability Board was a significant innovation that had effectively pushed reforms through in recent years. However, it was paradoxical that such an important issue was not the subject of a treaty-based organization and was instead being addressed by an ad hoc group.

• Good analysis and modelling are key components of proactive risk management, as is including risk management capabilities at the start of new projects and other strategic initiatives.
• Right now, the RUCP is operational for a couple of services only, but provides early support for “mobile inspections” (pre-defined check-lists used on tablets).
• For example, the alternative uptick rule was a rule passed by the United States Securities and Exchange Commission (SEC) in 2010 in efforts to preserve market stability and confidence.
• Well-educated and well-trained inspectors are capable of providing useful advice to businesses and ultimately promote compliance and risk-management.

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He emphasized the need to better move forward the process of monitoring shadow banking in order to avoid them contributing to another crisis. The Fund had developed new instruments that examined both sides and looked at the repercussions of a country’s policy from a multilateral perspective and also its spillover risks. The Fund had also provided technical assistance to its members to assist them in introducing new and innovative regulations. International taxation issues required better coordination because ineffective tax regulations had negative spillover effects.

The course includes four modules that provide a comprehensive understanding of credit risk, market risk, operational risk, and asset and liability management. After completion, you can sit for the formal exam proctored by Pearson VUE, and earn your official GARP Financial Risk and Regulation certificate. Mr. BERTUSCH-SAMUELS said over the past five years, much had been done to avoid a full-on global recession, including through the massive fiscal stimulus and accommodating policies by major banks. While addressing policy priority, it was important to complete the job of repairing the financial sector and reforming the financial supervision framework. The IMF was striving to provide policy advice that would help secure not only a sustainable and balanced recovery, but also one that was job-rich. The Fund’s management and board had fostered an environment that was examining closely and aiming to address jobless growth trends.

Good analysis and modelling are key components of proactive risk management, as is including risk management capabilities at the start of new projects and other strategic initiatives. Today, less than 40% of business executives are reaping the benefits of consulting with risk professionals early in their programmes. As digital reshapes financial services, regulatory, risk and compliance strategies must continue to evolve. Banks that succeed will excel at proactively addressing the impact of digitization on compliance, accountability, transparency, risk management and data governance. It has now been over four years since the corporate scandals rocked investor confidence and led to the passage of Sarbanes-Oxley.

The key strength of the system is that it integrates data from a number of sources, including notifications from the health care system, and considerably improves risk management at a very limited cost. Data from the pilot questions collected with the iREG survey confirms this general finding of uneven and incomplete diffusion and uptake of risk-based approaches – but also of their slowly taking root in the regulatory landscape. Out of the 39 countries (with the EU being included as a country) surveyed and responding overall to the questionnaire, only 32 provided a response on the new “pilot” risk-based regulation questions, potentially indicating some perplexity and/or lack of awareness or interest about the topic. This chapter seeks to reflect such progress, and particularly practices that involve novel applications of digital technologies, and incorporation of behavioural insights.

• As on-site inspections were rendered impracticable due to numerous mobility, access, or packaging restrictions, countries started devising strategies to design and adopt remote tools to ensure the continuation of inspection activities.
• In the short time that the PCAOB has been in operation, it has developed a registration and inspection program that takes into consideration the factors unique to non-U.S.
• In this turbulent business environment, many executives find the need to revise and adapt their strategies and operating models at a rapid pace.
• Today, less than 40% of business executives are reaping the benefits of consulting with risk professionals early in their programmes.
• An inspection reform towards a risk-based approach was implemented in Lithuania since 2008, which involved changes to adopt strong and legally binding instruments to inspections’ practices.

While the OECD’s Toolkit for Regulatory Inspections and Enforcement (OECD, 2018[22]) provides a framework for conducting such work, it would require considerable resources to systematically conduct in each country included in this Outlook, even were we to research only selected regulatory areas. Instead, in this section we briefly report the preliminary results from an analysis of available data on regulatory inspections and enforcement resources. Indeed, such work has the first benefit to highlight the importance of the regulatory enforcement function in terms of public administration staff (and thus of budgetary resources).