The Office of Financial Research (OFR) has released the second paper in its Working Paper Series to promote best practices in financial risk management. The paper, Forging Best Practices in Risk Management, provides a broad assessment of risk management practices and how risk management can be improved.
The paper approaches risk management from three perspectives: risk measurement by individual firms, governance and incentives, and systemic concerns.
The Dodd-Frank Act established the OFR to, among other things, improve the quality of data and analysis for assessing threats to financial stability. The OFR Working Paper Series makes accessible the OFR’s in-depth work to analyze and measure such data. The OFR has invited interested parties to review and discuss the working papers with the Agency.
The OFR’s first paper in the Working Paper Series, A Survey of Systemic Risk Analytics, focused on quantitative tools for assessing threats to financial stability.