The Respect Scenario from the FSA?
The presentation by the FSA last night on their consultative paper called "Stress and Scenario Testing (CP 08/24)" was a real disappointment last night. The presentation was at best average, not adding any more value than what you could get from scanning their paper. However, what was worse was the Q&A session at the end, with a variety of questions from the audience being answered by the FSA representative with "Thanks, that was a very good question and I will get back to you on it…".
The organisers (ISDA and PRMIA) had managed to get around 200 risk managers to attend which was an impressive turn-out with only standing room left as the event started. I would suggest if the FSA want more feedback from the industry it would be better if they would send someone along who is at least able to add value to the conversation. Their representative last night was doing his best but was just too junior, too inexperienced and lacked the confidence to answer questions in a meaningful manner.
Regulators are telling everyone to "raise the bar" on standards at the moment – they would find it helpful if they would apply this mantra to themselves and the people they put out as representing their views and expertise.
Humm… interesting,
I would have loved to see this presentation,
Thanks for writing about it
Thanks, but I hopefully saved you from wasting some time going to it! – the consultative paper linked in the post is a reasonable read – reverse scenario testing being the strongest idea i.e. lets assume the bank has gone bust and then work backwards to put together scenarios for how that could have happened, but the speaker from the FSA was very inexperienced. You might also want to take a look at https://www.xenomorph.com/regulatory-camouflage and more recently https://www.xenomorph.com/riskminds-the-failure-of-risk-models
“Good blog. Pretty fascinating and accurately published article. Thanks once more – I will return.
Thanks, not sure things have improved since this event. With the regulators it is often a game of “pot luck” as to whether who you are dealing with has any good insight or not. Not sure if the banks regard a knowledgable regulator as an asset or a threat, could be either I guess depending on what you need to explain…