The regulatory gaps in which the unregulated entities operate need to be identified and effectively addressed so that the systemically-important regulated entities are not put to undue risk by the activities of the unregulated entities, entailing significant public cost. Employee-compensation structure The remuneration structure of the employees is also stated to have played a role in the recent crisis.
The pay structure was flawed in as much as the employee bonuses formed a large part of the entire remuneration package. The performance-based remuneration did induce risky behavior in the investment managers of the major global financial entities.