In volatile financial markets suffered by the U.S. subprime crisis, financial institutions should see this as an opportunity to address weaknesses in their risk management frameworks and Singapore's central bank will strengthen its role as supervisors, said a senior Singapore financial official on Monday.
"Monetary Authority of Singapore (MAS) will continue to engage financial institutions on their risk management practices, and to ensure that capital and liquidity buffers and estimates of potential losses are appropriately forward looking," said Teo SweeLian, deputy managing director of Prudential Supervision of MAS, at the annual risk management conference.
The de facto central bank will conduct more in-depth supervisory "on the appropriateness" of financial institutions risk management frameworks, especially in areas relating to stress testing and contingency planning, said Teo.
He added that MAS will continue to adopt a macro-prudential orientation over and above its day-to-day supervision of financial institutions.
"In this regard, our existing supervisory structure where MAS is both the central bank and financial regulator has helped in our efforts to monitor potential vulnerabilities which may be linked to particular features of business or credit cycles," he said.
In particular, he said, having regular and timely access to market-related information is critical for MAS to be able to respond quickly and appropriately to financial imbalances in the economy, whether it is through the calibration of prudential tools or the intensity of our supervisory review.
He also advised the financial industry itself to integrate and enhance its risk management approach. At the same time, institutions need to work toward developing a culture that is risk-focused.
"Success in this area, to a large extent, will depend on the commitment of Board and senior management," he added.
Source: Xinhua
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