FINMA Identifies and Assesses Risks Facing Financial Sector
FINMA published the 2020 Risk Monitor, which identifies the key risks facing the supervised institutions in Switzerland and describes the resulting focus of its supervisory activity. This version of Risk Monitor also discusses risks associated with the use of big data in the insurance sector. The Risk Monitor shows elevation of certain risks and identifies the new key risk of impending defaults or corrections in corporate loans and bonds abroad, in relation to the assessment of risks driven by the ongoing COVID-19 pandemic.
In addition, FINMA believes that the following risks that were identified as principal risks in 2019 still remain in focus for the supervised institutions and the Swiss financial center:
- Persistent low interest-rate environment (increasing)
- Possible correction on the real estate and mortgage market (increasing)
- Disorderly abolition of LIBOR benchmark interest rates (decreasing)
- Cyber-attacks (increasing)
- Money laundering (same)
- Increased impediments to cross-border market access (same)
Other long-term risks identified by FINMA include demographic aging, declining financial instrument valuations in asset management, and financial risks arising from climate change. In the 2020 Risk Monitor, FINMA also outlines how it has continued to pursue its agenda for climate risk mitigation since last year.
Related Links
Keywords: Europe, Switzerland, Banking, Insurance, Risk Monitor, Big Data, Climate Change Risk, COVID-19, Cyber Risk, Insurtech, FINMA
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Victor Calanog, Ph.D.
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Previous Article
ESMA Publishes Risk Dashboard for Third Quarter of 2020Related Articles
EBA Clarifies Use of COVID-19-Impacted Data for IRB Credit Risk Models
The European Banking Authority (EBA) published four draft principles to support supervisory efforts in assessing the representativeness of COVID-19-impacted data for banks using the internal ratings based (IRB) credit risk models.
EP Reaches Agreement on Corporate Sustainability Reporting Directive
The European Council and the European Parliament (EP) reached a provisional political agreement on the Corporate Sustainability Reporting Directive (CSRD).
PRA Consults on Model Risk Management Principles for Banks
The Prudential Regulation Authority (PRA) launched a consultation (CP6/22) that sets out proposal for a new Supervisory Statement on expectations for management of model risk by banks.
EC Regulation Amends Standards for Calculating Credit Risk Adjustments
The European Commission (EC) published the Delegated Regulation 2022/954, which amends regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.
BIS Hub Updates Work Program for 2022, Announces New Projects
The Bank for International Settlements (BIS) Innovation Hub updated its work program, announcing a set of projects across various centers.
EIOPA Issues Cyber Underwriting Proposal, Statement on Open Insurance
The European Insurance and Occupational Pensions Authority (EIOPA) published two consultation papers—one on the supervisory statement on exclusions related to systemic events and the other on the supervisory statement on the management of non-affirmative cyber exposures.
US Senate Members Seek Details on SEC Proposed Climate Disclosure Rule
Certain members of the U.S. Senate Committee on Banking, Housing, and Urban Affairs issued a letter to the Securities and Exchange Commission (SEC)
EIOPA Consults on Review of Securitization Framework in Solvency II
The European Insurance and Occupational Pensions Authority (EIOPA) published a consultation paper on the advice on the review of the securitization prudential framework in Solvency II.
UK Authorities Issue Regulatory and Reporting Updates for Banks
The Prudential Regulation Authority (PRA) issued a statement on PRA buffer adjustment while the Bank of England (BoE) published a notice on the statistical reporting requirements for banks.
BCBS Issues Climate Risk Principles while HKMA Expresses Its Support
The Basel Committee on Banking Supervision (BCBS) issued principles for the effective management and supervision of climate-related financial risks.
