In this situation, the regulatory system can be irrelevant in the face of fast paced financial developments. In this context, the content, characteristics, embedded risks and the accounting of the ever growing array of financial instruments particularly derivatives, hedge products and other similar products have to be fully understood so that guidelines governing them may need to be revised and made relevant, and quickly.
Stress tests that are produced on a regular basis are most evolved in the market risk area. Regular credit risk stress tests tend to be conducted primarily at the level of business lines. More comprehensive firm-wide credit stresses and scenarios often tend to be more ad-hoc.