For that reason, prudent banks have long understood the importance of managing credit concentration risks - it is one of the basic tenets of banking that the Federal Reserve has long emphasized. So what exactly are concentrations of credit and what risks do they pose to institutions?
The Council identified four priority areas for action: (i) enhancing transparency; (ii) improving valuation standards; (iii) reinforcing prudential rules and risk management in the financial sector; and (iv) improving market functioning. Very active work is well under way for the actual implementation of the Council’s action points.