We are likely to hear a lot more about “tailoring” when it comes to bank regulation in the U.S. It’s hard to argue with the concept that regulation and regulatory burden should be proportionate to a bank’s size, complexity, and risk. Applying that concept in a thoughtful, prudent way is quite another matter. Background The…

A black swan refers to a highly improbable but impactful event. The metaphor can apply to a wide range of events, even baseball records. Black swans most frequently apply to financial risk management, including regulatory capital and stress testing. The Global Financial Crisis (GFC) exposed some of the gaps in probability-based capital frameworks. Stress testing…