SEC Director of the Division of Economic and Risk Analysis Discusses Risk Assessment

SEC Chief Economist and Director of the Division of Economic and Risk Analysis Mark Flannery delivered remarks at the Global Association of Risk Professionals' Risk Assessment Convention. His remarks concerned two kinds of risk assessment: (i) market misconduct and (ii) market-wide systemic risks.

According to Mr. Flannery, the Corporate Issue Risk Assessment Program and the Broker-Dealer Risk Assessment Program both use analytical modeling tools to assist the SEC in investigating incidents of market misconduct. He noted that the SEC currently is extending risk models to identify a variety of risks aimed at registered investment advisers through their annual form ADV.

Market-wide risks, according to Mr. Flannery, have garnered a great deal of attention since the financial crisis. He explained that because these risks are challenging to measure and evaluate, the SEC usually attempts to address them through the rulemaking process.

Mr. Flannery also noted that "high-quality and usable" data are the foundation for accurate and effective risk assessment, which comes from mandated disclosures from market participants. He said that the SEC has launched its Quantitative Research Analytical Data Support Program to address "complicated data-driven" issues.

See: Mr. Flannery's Remarks.