Our framework for macroprudential supervision supplements the traditional, firm-by-firm approach to supervision with a routine use of horizontal, or cross-firm, reviews to monitor industry practices across banking, insurance and investment management sectors. The same practice helps us to identify common funding strategies, balance sheet developments, interconnectedness, and other factors with implications for systemic risk.
Macroprudential supervision relies upon proactive activities and tools to identify, assess and monitor risks to the financial system. These activities include the analysis of macroeconomic and financial market information. Macroprudential supervision operates alongside microprudential (or entity-level) supervision, to assist our supervisors in their efforts to prevent or mitigate the detrimental effects of the key risks identified on an ongoing basis.
The Macroprudential Analysis team assists supervisors responsible for individual firms by:
- Identifying and assessing important changes in relevant financial sectors (i.e., banking, insurance and asset management) as well as macroeconomic factors affecting these markets;
- Providing early warning signals of emerging risks, and enabling prompt action;
- Delivering value-added information for forward-looking monitoring; and
- Identifying global, regional and domestic macro-financial issues that may affect the banking, insurance and asset management sectors in the QFC.
Drawing on the work of industry practitioners and financial market experts globally, we apply quantitative and qualitative methods to evaluate the conditions of supervised firms as well as the risks they may pose to the broader financial system within the QFC.