Another related issuance of the BSP is the revision of the prompt corrective action or PCA framework following the issuance of Circular No. 523 dated 23 March 2006. This was done to compel banks to take pre-emptive action against what may constitute as threats to financial stability and thereby, ensure that they continue to operate in a safe and sound manner.
•  Moreover, quantitative risk measurement methods, such as value-at-risk or expectedshortfall models, which could figuratively speaking be described as “looking in the rear-view mirror” and whose use has increased, have proved necessary but inadequate and should be supplemented by forward-looking instruments such as stress tests and scenario analyses, which also take into account changes in third party behaviour.