Addressing Risk Challenges in a Changing Financial Environment:the Need for Greater Accountability in Financial Regulation and Risk Management
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The need for continuous monitoring and regulation is particularly attributed to, and justified
by, the inevitable presence of risks and uncertainty – both in terms of certain externalities and
indeterminacies which are capable of being reasonably quantified and those which are not.
Amongst other goals, this paper aims to address complexities and challenges faced by
regulators in identifying and assessing risk, problems arising from different perceptions of
risk, and solutions aimed at countering problems of risk regulation. It will approach these
issues through an assessment of explanations put forward to justify the growing importance of
risks, well known risk theories such as cultural theory, risk society theory and
governmentality theory. “Socio cultural” explanations which relate to how risk is increasingly
becoming embedded in organisations and institutions will also be considered as part of those
factors attributable to why the financial environment has become transformed to the state in
which it currently exists.
A consideration of regulatory developments which have contributed to a change in the way
financial regulation is carried out, as well as developments which have contributed to the de
formalisation of rules and a corresponding “loss of certainty”, will also constitute focal points
of the paper. To what extent are risks capable of being quantified? Who is able to assist with
such quantification – and why has it become necessary to introduce other regulatory actors
and greater measures aimed at fostering corporate governance and accountability into the
regulatory process? These questions constitute some of the issues which this paper aims to
address.
Keywords
HG Finance