Duffie Proposes Stress-Test Matrix to Monitor Risk
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The world’s largest banks and investment firms should undergo quarterly stress tests to identify risks that could sink the financial system, according to a proposal by Stanford University finance professor Darrell Duffie.
“I’m not talking about the ordinary, matter-of-course, risk management of institutions,” Duffie said during a presentation today in New York at a conference attended by officials from the Federal Reserve Bank of New York, the Senate Banking Committee, the Commodity Futures Trading Commission and representatives of Deutsche Bank AG and JPMorgan Chase & Co. “We’re looking at what are the sources of risk and how are they flowing through the system. We want to connect the dots.”