Corporate Governance, Financial Institutions and Risk Management
Strong financial institutions are a cornerstone of successful capital markets, and ultimately the creation of wealth and economic well being. The failure of such institutions (e.g., HIH Insurance) can have a catastrophic financial effect, as well as considerable social cost. The focus of this research program is the development, testing, and implementation of risk management procedures, of which the most important are likely credit risk, market risk (e.g. interest rate risk, foreign exchange risk) and operational risk. Such issues take on greater importance given the expansion of capital adequacy proposals from the Bank for International Settlements, as well as debate about what constitutes effective prudential regulation in the financial sector (i.e. "market governance"). This research can have an important impact on determining the most effective means for assessing the efficiency of financial market regulation.
Related research will identify appropriate performance methods for measuring compliance performance in the financial services sector. A sustained, effective corporate compliance program is pivotal to the ongoing success of corporate governance in the financial services sector. This research will help establish appropriate risk management standards for financial firms (e.g., general insurance), identify the effect of regulatory reforms (such as the recent Financial Services Reform legislation) and also aid in establishing an analytical framework within which to identify non-criminal breaches of corporate and technical compliance.