Stress tests that had been done by a centralized risk management function also provided an additional check on the exposures of business line units that inevitably have a narrower perspective on risk. The results of these stress tests also served as sources of discussion for centralized decision-making by senior management.
This record, while reassuring, should not imply that areas in need of improvement were not also exposed. Some of these areas were unexpected and are of the nature of typical lessons that one discovers as one lives through a crisis. Other areas for improvement are more basic, however, and indicate practices that should become a standard part of banks’ risk management tool kits.