The economy is passing through turbulent times, amidst growing uncertainty and dissatisfaction, decreased confidence and crashing financial regulatory systems and structures. It is critical at this time that financial institutions assess the risks beforehand, devising appropriate risk management structures to deal with worst-case scenarios such as the financial meltdowns. Governor Randall spoke at greater lengths about this during his speech, some important highlights of which are:
- Technology is paramount in integrating markets and methods of doing businesses, through innovation, accessibility and reduced search costs, bringing market factors closer, in an efficient fashion.
- In bringing markets closer, assurance of quality is of prime importance, through varied means such as rating systems.
- In wake of the current financial crisis, there might be a stage where financial institutions providing security coverage against risk may have to deal with multiple counterparties selling off their assets, which may in turn have the effect on the value of assets. Ensuring the risk is appropriately valued and mitigated calls for effective policy management on part of the quality assurance institutions, risk managers and financial institutions. This would result in improved structure for governance of such policies.
- There are also possibilities of introducing third party or centrally regulated intermediaries; however, introducing them may come at a greater cost, obligations and a high degree of standardization.
- Assurance of the failure of multiple counterparties must be analyzed and measures devised to deal, especially in cases of market crashes.
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