As the credit crisis moves forward, some thoughts are already turning to the inevitable post-mortem which an event of this magnitude necessitates. One obvious starting point will be the discussion around how to deal with the systemic risks which quickly proved lethal to the banking sector and then the wider economy.
Companies would be unwise however to think that this is purely a debate for government and regulatory bodies. Preparing now for a switch to systemic risk regulation is something which no company can afford to ignore as John Farrell of KPMG’s Advisory practice explains.
If this crisis teaches us one thing, it will be that the business world should pay more attention to the issue of systemic risk. It has grabbed our attention in the most spectacular fashion imaginable and is likely to shake the foundations of future risk management to their very core.
It was an inability to cope with the systemic risks which brought us to where we are today. Such systemic risks — the rapid decline of leading banks, the tightening of credit, spiraling unemployment, the collapse of consumer spending — rarely became the focus of any single regulator’s efforts.
See full Press Release.
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