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Legal and Conduct Risk in the Financial Markets, 3rd Edition by McCormick, Roger; Stears, Chris (22nd March 2018)

Part IX Legal and Conduct Risk Management, 29 The Essentials of Legal and Conduct Risk Management

Roger Mccormick, Chris Stears

From: Legal and Conduct Risk in the Financial Markets (3rd Edition)

Roger McCormick, Chris Stears

Subject(s):
Credit risk — Financial regulation — Regulators

This chapter first discusses the general approach of regulators to risk management. Regulators often claim that they take a risk-based approach to the regulation of banks and other financial institutions. What matters to the regulator is compliance with the substance of its enunciated principles, not merely with their form. ‘Creative compliance’ and trying to find ‘ways round’ a clearly stated regulatory principle are not options. However, legal and conduct risk can be affected simply by a change of attitude on the part of the regulator without there being any change in rules or regulations. The remainder of the chapter covers risk management principles, the scope of the risk management function, examples of risk scenarios, identification of risks, assessment of risks, monitoring, and control and mitigation.

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