The global body representing actuaries has called for far-reaching systemic changes to avoid a repeat of the global economic crisis, including changing executive remuneration models.

The International Actuarial Association has produced a report which, among other things, called for the creation of improved risk management and cooperation between national jurisdictions, the implementation of more counter-cyclical regulatory regimes and improved risk governance.

Releasing the contents of the report in Australia, the Institute of Actuaries of Australia said it had wide-reaching implications for regulators globally as they considered measures to strengthen the financial system.

Australian institute president Trevor Thompson said while the Australian banking system had proven its robustness, Australia was clearly not insulated from global events.

The chair of the International Actuarial Association’s enterprise and financial risk committee, Tony Coleman, said there was a need for remuneration incentives to be linked to risk culture to drive behavioural change.

“A sound risk culture will ensure timely reporting of risk crucial information that allows management to take corrective action before risks erupt,” he said. “Remuneration is a key driver of cultural change, so we support increasing capital requirements for market participants with remuneration incentives focused excessively on short-term results.”