Is de-risking an over-reaction to over-regulation?

‘Risk avoidance' appears to have replaced ‘risk management'

clock • 5 min read

The regulatory environment has seen significant growth in the wake of the global financial crisis, writes Jessica Thomas

The resulting effect is that ‘risk avoidance' appears to have replaced ‘risk management' and banks have embarked upon a wholesale culling of customers deemed to be ‘outside of risk appetite'. The phrase given to this practice is ‘de-risking' and, while many regulatory authorities insist it is not in line with international guidelines, the unfortunate reality is it has become a recognised problem within the global financial services sector and one which has been termed a large-scale market failure. The increase in regulatory activity means increased costs to banks - either in the face ...

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