Second and third Sybilline Book: Communicating risk analysis  The second message we might have found in the Sibylline Books is this: “Be aware that risk analysis has to be carefully communicated. Sometimes policy backups are necessary.” The example of stress testing immediately leads us to the third message of Sibylline Books.
In a setting in which financial analysis is communicated to the public it is important to find the balance between making realistic assumptions about scenarios and avoiding devastating self-fulfilling prophecies of the markets. Moreover, if stress tests detect capital needs private and public recapitalisation has to be announced and implemented, thereby preventing market uncertainty.