The Financial Services Authority (FSA) today called on firms to improve the stress testing of their businesses after its financial risk report highlighted the greater impact a shock could have were it to happen in the next 18 months.
The FSA's Financial Risk Outlook (FRO) 2007, published today, is designed to raise awareness of the priority risks which the FSA believes it, along with providers and users of financial services, should consider.
While the FSA's overall outlook for the global economy continues to be benign, the FRO identifies an increasing risk that it will become more unsettled. Key factors include the increasing geopolitical risks, which escalate the probability of an ‘event risk’ materialising; increasingly complex financial markets and the combination of low volatility of asset prices, a low market pricing of risk and stronger correlations between the prices of different classes of asset.
See full Press Release.
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