It is interesting to recall at this stage the work of the original Counterparty Risk Management Policy Group 1 co-chaired by E. Gerald Corrigan and Stephen G. Thieke which already in 1999 stressed that “better knowledge of one’s counterparty represents the foundation upon which the other pillars of risk management rest”.
Re-establishing these principles in risk management practice is essential for the resilience of the financial system. I would like to highlight in particular the trend witnessed in recent years for many market participants to exclusively rely on external assessments for the management of their credit risk. These assessments have been often provided by only a small number of specialised institutions (rating agencies).