State of the Financial Services Industry 2011
Oliver Wyman recently launched our 14th annual State of the Financial Services Industry report, titled "The Financial Crisis of 2015: An Avoidable History" in Davos, Switzerland during the 2011 Annual Meeting of the World Economic Forum. In our report, we posit that although financial services executives and regulators have worked to design a more stable financial system in the wake of the global financial crisis, they should nonetheless be prepared to consider a variety of adverse scenarios that could create another crisis in the future.
The report "stress tests" the current financial system by describing a possible scenario for a future financial crisis. Under this scenario, the risk forced out of the Western banking sector by tougher regulation then flows into the shadow banking sector and into emerging markets, forming bubbles in commodities and related assets. The bursting of these bubbles in turn triggers sovereign debt restructuring in vulnerable, developed markets. The report suggests this is only one of the potentially adverse scenarios financial institutions and regulators could face that should be stress tested in order for industry participants to better manage risks and shape their strategy development.
Considering pessimistic scenarios is not a prediction of future outcomes; rather we believe scenario analysis and stress testing are tools that should be used by financial institutions and regulators to help minimize the impact of potential future crises.
To download a copy of "The Financial Crisis of 2015: An Avoidable History," please click here.