From valuations and decisions still largely based on deterministic values, singlevalue variables and the simple “summing up” of individual items they will move towards widespread use of both objective and subjective probability distributions.
The next step will be even more towards considering portfolios as a whole and taking account of the linkages between asset and liability values, the structure of the balance sheet and immunization strategies. It will be less and less common for overall risk to be calculated by adding up the risk of the individual components. Italian banks are readying themselves.