Assessment of risk concentration

In order to perform supplementary supervision of the risk concentration of regulated entities in a financial conglomerate, the coordinator should coordinate with the relevant competent authorities in order to monitor how risk concentrations may create potential contagion effects within the financial conglomerate, conflicts of interests and circumvention of sectoral rules.

Taking into account the structure of the financial conglomerate, the coordinator and relevant competent authorities should agree whether in order to effectively assess risk concentration, it is necessary to request information from regulated entities within the financial conglomerate to supplement the information already available through reporting requirements.

Information exchanged between the coordinator and the competent authorities may include, if available, the following:

• a) how the regulated entities within the financial conglomerate manage risk exposures which interact across different risk categories;
• b) analysis and assessment by competent authorities of internal reporting and limits systems of sub-groups or of individual entities in the financial conglomerate;
• c) risk concentrations at cross-sectoral level, other than risk concentrations already being assessed at cross-border level within each sector.

The coordinator and the competent authorities should inform each other about any supervisory action or measures taken towards the entities within the financial conglomerate in relation to risk concentrations. The coordinator should stand ready to facilitate the identification of joint supervisory measures on the subject.