Stress testing and scenario analysis are essential tools in the analysis of risk, because they can reveal potential concentrations of risk that may not be apparent when using information gleaned from normal times. Liquidity risk management Next, I wish to consider the second fundamental, liquidity risk management. Because of its central role in the business of banking, liquidity risk requires rigorous and effective management.
In July 2019, the Committee carried out its first public consultation on the choice of alternative interest rate benchmarks to yen LIBOR, including the ones for new loans and bonds, in order to solicit comments from a wide range of market participants. The results of the first public consultation were then published in November the same year.