It is important for firms to have the flexibility to choose how they reward their employees, but it may be valuable to consider the development of industry-wide principles of sound risk management that would touch upon incentive-compensation issues.
Such principles could foster market discipline in firms if investors were to view the principles as best practices and were to more heavily discount the reported short-term earnings of firms that failed to adopt best practices. Although reaching consensus on principles for compensation would be difficult, it seems well worth the effort.