We Are Going Before We Are Asked
A few days ago at the Lake Attersee. It was very hot during the day - in the late afternoon a thunderstorm came from the west and within a few minutes the wind changed from doldrums to a storm and the water began to swirl. The flashing lights of storm warning were switched on …
This is not a so rare event, but again (small) sailing boats have been surprised and needed to be pulled ashore by the water rescue.
I completely save held my breath for a moment and it came to my mind that everything is easy when things go smooth - it's a no-problem-problem.
We know this situations in finance and this is the reason why we often answer questions and go to visit our clients before asked.
When the flashing lights of regulatory storms turn on it may be late …. this was true when (a naive belief in) VaR became questionable and it is now indispensable with xVA - especially for small and medium sized market participants, who are confronted not only with exposure modeling but centralized collateral management ….