While the banks’ risk exposures and their riskmanagement strategy is usually an item of public disclosure, there is a corresponding need for corporates too to make adequate disclosures regarding their risk exposures, specially to derivatives and foreign exchange. This would enable the banker to assess the risk profile of the corporate accurately and to evaluate the appropriateness of various financial products on offer.
As Alan Greenspan said in 1997: “As financial transactions become increasingly rapid and complex, I believe we have no choice but to harness market forces, as best we can, to reinforce our supervisory objectives. The appeal of market-led discipline lies not only in its cost effectiveness and flexibility but also in its limited intrusiveness and its greater adaptability to changing financial environments.