Financial crises and natural disasters have something in common – they expose our weaknesses. Just as an earthquake might level the weakest buildings and disrupt the local infrastructure, crises in the financial system often uncover the riskiest of portfolios and institutions.
This was certainly the case with the 2008 financial crisis, the effects of which linger to this day. However, whether natural or man-made, these disasters and crises also provide us with an opportunity to build stronger and less vulnerable systems and structures for the future.
This white paper describes how the Financial Accounting Standards Board’s current expected credit loss (CECL) guidance further strengthens the foundation, but implementation won’t be easy and many questions remain.