Moreover, since this framework will require powerful quantitative and judgemental based tools to guide decision-making, I would like to highlight the importance of taking a twin pillar approach so that the risk to which an institution is exposed is recognised and controlled – here, I am referring to the twin pillars of statistical risk models and stress testing.
Although today I will focus on the framework being developed by institutions in the private sector, I would like to point out that many of the guiding principles as well as the quantitative and judgemental based tools are equally relevant in public institutions such as central banks. 2.