History has demonstrated that risks evolve in response to regulatory pressure and the animal spirits that emerge as memories fade, as well as to animal spirits. As a result, the infrastructure needed to learn the things we don’t know needs to be put in place.
An essential element of that infrastructure is learning the lessons of history – both the lessons of what happened, and the fact that supervisors and regulators will on occasion be surprised. Learning those lessons is not as simple a task as it may sound. But it is certainly a far more important task than it sounds.