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Macroprudential oversight, risk communication and visualization

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  • Sarlin, Peter

Abstract

This paper discusses the role of risk communication in macroprudential oversight and of visualization in risk communication. Beyond the increase in data availability and precision, the transition from firm-centric to system-wide supervision imposes vast data needs. Moreover, in addition to internal communication as in any organization, broad and effective external communication of timely information related to systemic risks is a key mandate of macroprudential supervisors. This further stresses the importance of simple representations of complex data. The present paper focuses on the background and theory of information visualization and visual analytics, as well as techniques within these fields, as potential means for risk communication. We define the task of visualization in risk communication, discuss the structure of macroprudential data, and review visualization techniques applied to systemic risk. We conclude that two essential, yet rare, features for supporting the analysis of big data and communication of risks are analytical visualizations and interactive interfaces. For visualizing the so-called macroprudential data cube, we provide the VisRisk platform with three modules: plots, maps and networks. While VisRisk is herein illustrated with five web-based interactive visualizations of systemic risk indicators and models, the platform enables and is open to the visualization of any data from the macroprudential data cube.

Suggested Citation

  • Sarlin, Peter, 2016. "Macroprudential oversight, risk communication and visualization," Journal of Financial Stability, Elsevier, vol. 27(C), pages 160-179.
  • Handle: RePEc:eee:finsta:v:27:y:2016:i:c:p:160-179
    DOI: 10.1016/j.jfs.2015.12.005
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    Cited by:

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    2. Zhibin Niu & Junqi Wu & Dawei Cheng & Jiawan Zhang, 2021. "Regshock: Interactive Visual Analytics of Systemic Risk in Financial Networks," Papers 2104.11863, arXiv.org.
    3. Abdulrahman Alrabiah & Steve Drew, 2020. "Proactive Management of Regulatory Policy Ripple Effects via a Computational Hierarchical Change Management Structure," Risks, MDPI, vol. 8(2), pages 1-29, May.
    4. Mark E. Paddrik & Richard Haynes & Andrew E. Todd & William T. Scherer & Peter A. Beling, 2016. "Visual analysis to support regulators in electronic order book markets," Environment Systems and Decisions, Springer, vol. 36(2), pages 167-182, June.
    5. Zhibin Niu & Runlin Li & Junqi Wu & Dawei Cheng & Jiawan Zhang, 2020. "iConViz: Interactive Visual Exploration of the Default Contagion Risk of Networked-Guarantee Loans," Papers 2006.09542, arXiv.org, revised Aug 2020.
    6. Douglas da Rosa München & Herbert Kimura, 2020. "Regulatory Banking Leverage: what do you know?," Working Papers Series 540, Central Bank of Brazil, Research Department.
    7. Peter Sarlin, 2016. "Computational Tools for Systemic Risk Identification and Assessment," Intelligent Systems in Accounting, Finance and Management, John Wiley & Sons, Ltd., vol. 23(1-2), pages 3-5, January.
    8. Sujatha Srinivasan & T. Kamalakannan, 2018. "Multi Criteria Decision Making in Financial Risk Management with a Multi-objective Genetic Algorithm," Computational Economics, Springer;Society for Computational Economics, vol. 52(2), pages 443-457, August.
    9. Kinsella, Stephen, 2019. "Visualising economic crises using accounting models," Accounting, Organizations and Society, Elsevier, vol. 75(C), pages 1-16.

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    More about this item

    Keywords

    Macroprudential oversight; Risk communication; Visualization; Analytical visualization; Interactive visualization; VisRisk;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • F37 - International Economics - - International Finance - - - International Finance Forecasting and Simulation: Models and Applications
    • F38 - International Economics - - International Finance - - - International Financial Policy: Financial Transactions Tax; Capital Controls
    • F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications

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