Also Quote by Myron Scholes
“A bank needs models to measure risk. The problem, however, is that any one bank can measure its risk, but it also has to know what the risk taken by other banks in the system happens to be at any particular moment.”
About This Quote
Banks must assess their own risk and also monitor systemic risk from other banks in real time.
In simple terms: Banks need to track both own and others' risk.
Key Takeaway
Implement continuous, shared risk dashboards.
Themes
risk management
systemic risk
financial stability
Mood
concerned
analytical
Type
professional
technical
When to use this quote
- banking
- regulation
- stress testing
- financial reporting
Key Concepts
interbank coordination
risk modeling
regulatory oversight
Questions to Reflect On
- How can banks ensure timely, accurate risk data sharing?
- What incentives promote transparent risk reporting?
A Different Perspective
Risk data may be delayed or inconsistent across institutions.
