For example, if a firm enters a new line of business and does not yet have a good framework for assuring its managers can measure the results of that business in light of its risks, supervision can detect that shortcoming and the firm can help address this vulnerability before the uncaptured risks materialize.
Similarly, our new long-term stable funding rule—the NSFR rule—provides objective standards to address risks that fall outside the boundaries of our short-term funding requirement—the LCR rule—and thereby takes some pressure off supervisors to monitor these risks on a case-by-case basis.