significant difficulties. The report therefore identifies two activities which, when conducted on a widespread scale without proper risk control frameworks, have the potential for systemic relevance. Derivatives trading on non-insurance balance sheets; Mis-management of short-term funding from commercial paper or securities lending. The industry has put forward five recommendations to address these particular activities and strengthen financial stability: The implementation of a comprehensive, integrated and principle-based supervision framework for insurance groups, in order to capture, among other things, any non-insurance activities such as excessive derivative activities. Strengthening liquidity risk management, particularly to address potential mis-management issues related to short-term funding. Enhancement of the regulation of financial guarantee insurance, which has a very different business model than traditional insurance. The establishment of macro-prudential monitoring with appropriate insurance representation. The strengthening of industry risk management practices to build on the lessons learned by the industry and the sharing experiences with supervisors on a global scale. Since the publication of The Geneva Association statement, in June 2010, the International Association of Insurance Supervisors (IAIS) issued its position statement on key financial stability issues. A key conclusion of the statement was that, "The insurance sector is susceptible to systemic risks generated in other parts of the financial sector. For most classes of insurance, however, there is little evidence of insurance either generating or amplifying systemic risk, within the financial system itself or in the real economy." Other organisations such as the CEA and the Property Casualty Insurers Association of America (PCI) have issued reports on the same subject. Discussion Systemic risk evaluates the likelihood and degree of negative consequences to the larger body. The term "systemic risk" is frequently used in recent discussions related to the economic crisis, such as the Subprime mortgage crisis. The systemic risk of a financial institution is the likelihood and the degree that the institution's activities will negatively affect the larger economy such that unusual and extreme federal intervention would be required to ameliorate the effects. The failing of financial firms in 2008 caused systemic risk to the larger economy. Chairman Barney Frank has expressed concerns regarding the vulnerability of highly leveraged financial systems to systemic risk and the US government has debated how to address financial services regulatory reform and systemic risk. A series of empirical studies published between the 1990s and 2000s showed that deregulation and increasingly fierce competition lowers bank's profit margin and encourages the moral