Similarly, on the side of exposures to risk in the financial sector, the question will be: where does it reside? The apparent total amount of risk could look quite acceptable but the concentration might not be. Second, there will be intense focus on the inter-linkages – the correlations – between institutions, portfolios and markets.
In a full assessment of the resilience of the financial system in the face of an event which affects housing prices, for example, the direct effect on a bank's portfolio of housing loans of lower house prices and/or higher unemployment is only part of the story.