Joint Forum releases reports on risk integration and aggregation and on operational risk transfer

The Joint Forum today released two reports, Trends in risk integration and aggregation and Operational risk transfer across sectors. Both are available on the websites of the Bank for International Settlements ( www.bis.org), the International Organization of Securities Commissions ( http://www.iosco.org) and the International Association of Insurance Supervisors ( http://www.iaisweb.org).

The first report, Trends in risk integration and aggregation, highlights the emphasis being placed on the management of risks on a firm-wide basis and related efforts to develop quantitative measures of aggregate risk, for example via economic capital models. It also notes a high degree of diversity among firms in their risk management and risk aggregation methodologies. The report's findings are based on a survey of 31 institutions in three financial sectors (banking, insurance and securities).

The second report, Operational risk transfer across sectors, is based on interviews carried out with 23 financial institutions in the three sectors. It focuses on risk management and supervisory issues arising when transferring operational risk from protection buyers (mainly banks and security firms) to protection sellers (mainly insurance companies).

The Chairman of the Joint Forum, Mr José María Roldán, said today, "These exploratory papers are very informative and broad-based. They build on the Joint Forum's previous effort to compare risk management practices and capital regulation across financial sectors.

He continued, "Both are forward-looking on subjects that supervisors will increasingly have to think about. One subject is how to measure and manage risks on a firm-wide basis, and the associated implications for regulation and supervision. Another is how to improve the management of operational risk across sectors, including the transfer of such risk. We are looking forward to comments on each paper from the industry and other interested parties."

Any comments or queries about these reports should be directed to the Bank for International Settlements (e-mail to silvano.tittonel@bis.org) before 15 November 2003.

The Joint Forum was established in 1996 under the aegis of the Basel Committee on Banking Supervision (BCBS), the International Organization of Securities Commissions (IOSCO), and the International Association of Insurance Supervisors (IAIS) to deal with issues common to the banking, securities and insurance sectors.