"the typical organization loses 5% of revenues yearly because of fraud. Businesses are subject to fraud risk, and it is critical for organizations to put in place effective control mechanisms to prevent fraud".
“... a greater focus on ESG risks is more in line with banks characterized by traditional activities.”
“... the paper analyses (i) how the AI Act should be applied and implemented according to its original intention of a risk-based approach, (ii) how the AI Act should be complemented by sector-specific legislation in the future to avoid inconsistencies and over-regulation, and (iii) what lessons legislators around the world can learn from the AI Act in regulating AI.”
This paper refines wildfire risk assessment methodologies for the European Central Banks, focusing on the Fire Weather Index, land cover types, and climate data. Using logistic regression and xgboost models, it projects a 12% increase in high-risk areas by 2050, emphasizing advanced models' importance for accurate financial risk evaluation.
"We study the general properties of robust convex risk measures as worst-case values under uncertainty on random variables. We establish general concrete results regarding convex conjugates and sub-differentials. We refine some results for closed forms of worstcase law invariant convex risk measures under two concrete cases of uncertainty sets for random variables: based on the first two moments and Wasserstein balls."
This paper introduces Natural Language Processing (NLP) concepts, text mining, and model design principles, detailing text preprocessing and feature extraction. Empirical research shows the model's excellent performance in risk identification and prediction, enhancing financial risk management accuracy and efficiency.
Optimal cybersecurity investment depends on threat severity and bank fragility. Regulators should consider operational resilience standards, red-teaming, subsidies, and negligence penalties to facilitate socially desirable cybersecurity investment.
The paper reviews the DORA Regulation, highlighting challenges in supervisory convergence, solution centralization, and oversight fragmentation. It argues that despite DORA's positive steps for digital resilience, Europe's fragmented supervision system hampers its effectiveness. The authors suggest that a more centralized, cross-sectoral supervisory approach is needed for better regulation and supervision.
The EU aims to foster digital transformation across sectors by 2030 through legislation on AI, cloud computing, and crypto-assets. However, compared to ESG, banking regulation lacks a clear framework for managing digital risks and supervisory assessment. This paper discusses digital innovation in banking, proposing risk-based Pillar 2 prudential framework and harmonized Pillar 3 disclosures to address this gap.
“The study is based on ten years' data for 560 banks and 214 insurance companies from 28 countries. We find that governance quality is lower for insurance companies as compared to banks.”