Prudential supervision
Risk-based oversight of financial institutions’ solvency, governance, liquidity and conduct to protect clients and market stability.
Prudential supervision is regulatory oversight aimed at ensuring that financial institutions remain sound, well governed and able to meet obligations. In Switzerland it is mainly associated with FINMA supervision of banks, insurers, securities firms and other licensed institutions, with intensity depending on risks and legal category. It covers capital, liquidity, risk management, internal controls, organisation, outsourcing and fit-and-proper standards. Prudential supervision differs from pure conduct supervision, though the two often interact where weak governance or incentives may harm clients or market integrity.