Second, any principles should provide a means by which firms identify and disclose their major risks, such as funding, foreign exchange or concentrations. Finally, compliance with these principles should be sufficient to support market confidence in the basic integrity of a firm’s published financial statements and other disclosures.
Because of the increasing complexity of financial instruments and the speed of movement in financial markets, intrusive supervision has become less meaningful, if not virtually impossible. Thus the federal banking agencies have adopted a risk-focused approach to banking supervision that emphasizes the adequacy of banks’ internal risk management systems.