Fed conducts horizontal reviews of banks' operational risk

03/31/2010 | Risk.net (subscription required)

The Federal Reserve launched several horizontal reviews to assess issues of operational risk, such as compensation and compliance risk. "Compensation practices at some banking organizations have led to misaligned incentives and excessive risk taking, contributing to bank losses and financial instability," Fed Chairman Ben Bernanke said. "The Federal Reserve is working to ensure compensation packages appropriately tie rewards to longer-term performance and do not create undue risk for the firm or the financial system."

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