September 1997

Financial crisis game: The ultimate stress-test


This is the game to beat all games. And it has a purpose: to give bankers and regulators experience of a financial crisis without the pain of losing their money - or their jobs. Euromoney (with PA Consulting Group and CSFI) set the conditions for a financial meltdown and invited 50 experienced professionals to come and play it out. The tension and the rivalry were real. Most agree they learned something about crises, and perhaps how to prepare better for the next one. By David Shirreff.


A financial crisis isn't just about numbers that don't add up. It's about players and regulators who make up the market. You can stress-test numbers on a computer, but you can't stress-test people, unless you pit them against each other in a simulation as close as possible to the real thing. They must be thrown into it suddenly, and be forced to make decisions on scanty information under severe time pressure. It must make them sweat. ...


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