Abstract

Chapters 10 and 11 stress a number of trends in banking. Some of these trends—globalization, increasing diversification, and the impact of technology—have been evident for quite some time. They imply a changing view of the content of risk. There is nothing new in risk. Banks have always been in the business of risk management. The issue is one of ensuring that new risks are properly identified and properly managed. Systems of supervision need to respond to the changes within the boundaries of what is achievable and desirable. Nevertheless, risk has now taken center stage. A major underlying factor has undoubtedly been the explosive growth in the trading of derivatives and the part played in it by banks. The implications of this development are not debated here. However, the concomitant risks are and have to be in the forefront of the minds of supervisors throughout the world.1