Or if I may paraphrase the title of Reinhardt and Rogoff’s best-seller, is this time any different? To make it truly different we need to take action. And we need to take action on different battle fields. 3. Adapting risk management to a new economic and financial environment  We need to start adapting our risk management frameworks to a new economic and financial environment. Public authorities need to incorporate the lessons from the crisis into the regulation in a meaningful manner. Among the different regulatory measures that need to be taken to prevent similar crisis in the future let me mention the following: 1.  promoting sound risk management practises and better integrating the risk management function into the decision-making process of agents;  2.  addressing the challenges posed by “too-big-to-fail” institutions and the related moral hazard;  3.  enhancing the global financial infrastructure to make it more robust to crisis, by promoting instruments and initiatives to mitigate counterparty risks and limiting the channels of contagion of firm- or sector-specific shocks;  4.  further encouraging transparency, fair valuation and standardisation in the elaboration of financial statements; and  5.  redesigning regulatory policies and capital requirements to avoid procyclical effects, for instance by introducing dynamic provisioning mechanisms as well as liquidity and funding requirements. The implementation of changes to the international banking regulatory standards as proposed in the Basel III accord will represent a key milestone in this regard.
BIS central bankers’ speeches  5  How could we be ready for the unthinkable if we were not even ready to assimilate past experiences? Some have said that standard risk management models could not capture a “black swan” event. Well, in some cases they could not capture a white swan either. In this regard, stress testing is seen as one of the core elements of a modern risk management function. The design of plausible yet demanding (forward-looking) stress tests both at the business area and at a firm-wide level can significantly contribute to understanding the sources and the consequences of the risks faced by the different institutions. One of the key lessons that we have learned from the crisis is the interaction between different types of risk. This interaction sometimes leads to compounding effects that were not properly captured by the risk management tools available before the crisis. A comprehensive risk management framework should therefore not only be firm-wide, but also encompass and aggregate in a meaningful manner the different types of risks to which a specific firm or institution is exposed. We need to pay attention to inter-risk correlations (i.e. the interaction across different types of risks), as much as to intra-risks correlations, and build a portfolio that is as diversified as possible on both dimensions and that matches our hedging needs or our risk-return preferences. But the single most valuable lesson that we have recently learned is that crises are more frequent than what we tend to think.