While improvements in the methodology of risk models and the transparency of better risk modeling in business decisionmaking are very useful, I believe we cannot stop there. Banks that have similar models of risk can have very different inherent levels of risk. That is, each institution has to decide what level of risk it is willing to accept to run its business.
Some organizations are willing to take on much greater levels of risk than others. Some lines of business and some products are inherently riskier than others, while some organizations may be more adverse to accept risk than others.