[I see many parallels and lessons that can be applied to IT Crisis Response]
\nThe Bank of International Settlements (BIS) recently released an excellent paper comparing the current crisis to the Nordic crisis. This is a particularly interesting case study because the Nordic credit crisis was relatively clean for a credit crisis. Perhaps most interesting is the fact that their crisis was unfolding at the same time as the Japanese crisis. I believe the thoughts from the BIS are particularly interesting as I was a proponent of the harsher Swedish Model – a bit more of an Austrian economics approach to the crisis as opposed to the Japanese model of trying to ensure capitalism without losers. Our analysis indicates that current policies have followed those (Nordic) principles in some respects, but have fallen short in other, arguably more important, ones.<\/p>\n","protected":false},"excerpt":{"rendered":"
In the current episode, the down-leg of the financial cycle had not proceeded as far and banks were further away from the point of technical insolvency.
\nHowever, the underlying weakness in balance sheets has not been recognised as fully. All this has tended to slow down resolution. In other words, the zombie banks live on just as they have in Japan.<\/p>\n
Principle 1: Early recognition and intervention
\nThe nature and size of the problems should be recognised early and intervention should follow quickly. The purpose of early recognition and intervention is to avoid a hidden deterioration in conditions that could magnify the costs of the eventual resolution. A key reason why costs tend to increase as action is delayed is that economic agents operate under distorted incentives. <\/p>\n
Principle 2: Comprehensive and in-depth intervention
\nIntervention and resolution should be broad-ranging and in-depth. The overriding objective is to restore lasting confidence in the financial system and its capacity to operate effectively and sustainably, without public support. Intervention includes three critical steps: (i) stabilising the financial system; (ii) restructuring balance sheets; and (iii) re-establishing the conditions for the sector’s long-term profitability.<\/p>\n
Principle 3: Balancing systemic costs with moral hazard P3: Intervention should strike a balance between limiting the adverse impact on the real economy and containing moral hazard.<\/p>\n
http:\/\/seekingalpha.com\/article\/219124-bis-we-have-failed-to-learn-from-the-nordic-crisis<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-295","post","type-post","status-publish","format-standard","hentry","category-dr-crisis-response-crisis-management"],"_links":{"self":[{"href":"https:\/\/www.cybersecurityinstitute.com\/blog\/index.php\/wp-json\/wp\/v2\/posts\/295","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.cybersecurityinstitute.com\/blog\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.cybersecurityinstitute.com\/blog\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.cybersecurityinstitute.com\/blog\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.cybersecurityinstitute.com\/blog\/index.php\/wp-json\/wp\/v2\/comments?post=295"}],"version-history":[{"count":1,"href":"https:\/\/www.cybersecurityinstitute.com\/blog\/index.php\/wp-json\/wp\/v2\/posts\/295\/revisions"}],"predecessor-version":[{"id":2782,"href":"https:\/\/www.cybersecurityinstitute.com\/blog\/index.php\/wp-json\/wp\/v2\/posts\/295\/revisions\/2782"}],"wp:attachment":[{"href":"https:\/\/www.cybersecurityinstitute.com\/blog\/index.php\/wp-json\/wp\/v2\/media?parent=295"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.cybersecurityinstitute.com\/blog\/index.php\/wp-json\/wp\/v2\/categories?post=295"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.cybersecurityinstitute.com\/blog\/index.php\/wp-json\/wp\/v2\/tags?post=295"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}