In essence, the guidance points to the need for a better balance between the qualitative and quantitative elements of exposure assessment and management for all types of counterparties. Conformance of Federal Reserve Supervisory Guidance with Other Supervisors The development of supervisory guidance on sound risk management, like industry practices, is an evolutionary process enhanced by experience.
It could be argued that, to a large extent, the fundamental principles of assessing counterparty credit risks, the measuring and stress testing of the potential future exposures of derivative positions, and the dangers of overreliance on collateral have been well documented in supervisory guidance for several years.