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ERM frameworks [11]

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Bullet points include: Banks. Insurers. Assets. Often IFRS, bank loans deemed financial instruments, IAS 39, loan provisioning generally retrospective, IFRS 9 amortised cost or fair value. Solvency II uses market consistent, i.e. fair, values (and less reliance on general purpose accounting). Liabilities. Also typically at amortised cost or fair value. Transfer/settle cost, approximated by best estimate + risk margin or MV of replicating portfolio, more prospective. Own credit risk. Basel III will effectively disallow benefit previously available under Basel II. No. More retrospective (hence stable in the short term) for banks than insurers. Potentially relevant to design of counter-cyclical elements of regulatory frameworks

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