4  BIS central bankers’ speeches  extrapolated from experience in more normal times, whereas at least some firm modeling uses roll rates and other such extrapolations that may not be as useful for measuring losses in tail events. A third, and related point, is that for some loan types the Federal Reserve model incorporates nonlinear effects of the macroeconomic scenario.
For example, a 20 percent decline in national house prices would mean that prices would decline substantially more in some markets and less in others, and losses in areas where house prices decline more would be disproportionately greater than losses in areas where house prices decline by less.