The role of banking supervisors in identifying emerging systemic risk
Abstract
As the banking industry and financial markets have evolved, so has the role of bank supervisors. Lessons learned through time, including the financial crisis of 2008, have forced supervisors to reassess their supervisory approach to more proactively identify and understand risks in the financial system as a whole vs the historic focus of assessing the condition of individual banks. Recently, supervisors have begun conducting ‘horizontal’ reviews across a range of entities, instruments and practices, thereby providing a macroprudential perspective and informing appropriate supervisory or policy responses. Additionally, the introduction of simulation models, including stress tests, into supervisory programmes provides a forward-looking assessment of how individual firms and the banking sector would perform under adverse operating scenarios. A forward-looking supervisory approach focused on identifying and understanding emerging macroprudential and systemic risks positions supervisors and policymakers to proactively respond to systemic threats.
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Author's Biography
Stephen Jenkins is responsible for the Supervision and Regulation, Credit Risk Management and Statistics and Analysis Departments at the Federal Reserve Bank of Cleveland. He oversees the supervision of more than 260 financial institutions in the Fourth Federal Reserve District, which includes Ohio, western Pennsylvania, eastern Kentucky and the northern panhandle of West Virginia. Stephen joined the Bank in 1986 as a bank examiner and was appointed to his current position in 2007. A Cleveland native, Stephen holds a bachelor’s degree from Bowling Green State University, an MBA from the University of Pittsburgh, and a degree in banking from the Graduate School of Banking at the University of Colorado.
Stephen Ong is responsible for the Risk Team Supervision, Macro Surveillance and Policy Analysis functions of the Supervision and Regulation Department at the Federal Reserve Bank of Cleveland. He oversees examiners responsible for the supervision of highly technical specialty areas of supervision, and economists responsible for the development of financial stability tools and macro risk identification. Stephen joined the Bank in 1988 as a bank examiner and was appointed to his current position in 2008. A native of Northeastern Ohio, Stephen holds a bachelor’s of science degree from the University of Akron, with a focus on finance and economics.
Citation
Jenkins, Stephen and Ong, Stephen (2014, September 1). The role of banking supervisors in identifying emerging systemic risk. In the Journal of Risk Management in Financial Institutions, Volume 7, Issue 4. https://doi.org/10.69554/QJLH7979.
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