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SEC Creates New Office for Division of Economic and Risk Analysis

To support the agency with data-driven risk assessment tools for various activities, the Securities and Exchange Commission (“SEC”) has created a new office within its agency’s Division of Economic and Risk Analysis (“DERA”). Announced last week, the Office of Risk Assessment will continue the DERA’s existing efforts of creating effective risk evaluation tools and models, as well as work in collaboration with SEC market experts.

Since being established five years ago, the DERA has led the SEC charge to develop risk assessment tools. For instance, the DERA created a broker-dealer risk assessment tool for SEC examiners to allot resources by evaluating a broker-dealer’s comparative riskiness in relation to its peer group. The SEC subdivision is also working with the agency’s Enforcement Division’s Financial Reporting and Audit Task Force and the Division of Corporation Finance to create a tool for supporting the identification of financial reporting abnormalities that may suggest financial fraud and help measure corporate issuer risk.

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