The Central Bank of Ireland today (22 December 2010) published the consultation paper ‘Consultation on Impact Metrics for the Risk Based Supervision of Financial Firms by the Central Bank and on Impact Based Levies’. The paper outlines proposed metrics that could be used to enable the categorisation of all regulated entities based on inherent impact. It sets out how the Central Bank plans to use such measures to categorise firms into different groups to which different supervisory approaches will be applied.
The use of impact metrics is a key component of the Central Bank’s strategy to enhance its supervision programme and fulfil its responsibilities to mitigate prudential risk and protect consumers. Whilst the risk of a serious supervisory or consumer related issue arising at a firm is largely unrelated to the size of the firm, the occurrence of such an event at a large firm will have a far more material impact on the Irish economy and State than an equivalent event at a small firm. Given this, the Central Bank believes it is necessary to adopt an enhanced long term approach to the supervision of all large, or high impact, firms.
The purpose of the consultation paper is to set out the key metrics that can be used in an impact-based supervision model to indicate a firm’s potential to do harm. These will be largely quantative measures such as the number of customers or total assets. The Central Bank plans to use these measures to inform the allocation of supervisory resources and the levies firms pay.
The deadline for responses is 24 February 2011. A copy of the consultation paper is available 
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