Banks that wish to remain competitive must keep up with the latest developments in risk measurement and management. Bankers must ensure that their models keep up with current practice and continue to capture risks accurately, especially as new activities and new products are introduced. Similarly, the supervisory community needs to keep up with developments in banking and finance.
Greater capital levels have been built up over the past few years, both in the German financial system and in the banks at its core. At the same time, though, the extended spell of low interest rates has left the system more vulnerable to unexpected developments.