Expect the unexpected

Stress testing

Why didn't they see it coming? Banks and regulators are scrambling to explain why their risk management teams failed to predict the scope of the recent dislocation in global financial markets. Stress tests are coming under particular scrutiny - market overseers around the world accuse banks of failures of imagination, analysis and communication in carrying out these vital risk measures, and tighter regulation is likely.

Shortly before the collapse of Bear Stearns in March this year, the Senior