EUROPE: The Joint Committee of the European Supervisory Authorities (ESAs)&nbsphighlight cross-sectoral risks

Thursday April 3 2014

The Joint Committee of the European Supervisory Authorities (ESAs) have published its third bi-annual report on risks and vulnerabilities in the European Union’s (EU) financial system.

The report has identified a number of potential vulnerabilities and cross-sectoral risks to the stability of the European financial system including:

• Weak and uneven economic recovery;
• Uncertain outlook in a number of global emerging economies;
• Asset price imbalances and risks of a sharp adjustment;
• Increased search for yield in a protracted low interest rate environment;
• Conduct of business risks;
• IT-related operation risks.

The report highlights risks linked to the conduct of business and points to series of cases related to financial institutions’ conduct of business, which risk undermining public confidence in financial institutions and markets and which have been associated with significant redress costs. In the report the ESAs recommend supervisors to place greater emphasis on management bodies’ responsibilities to address conduct risks and ensure the appropriate protection of consumers and investors

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