By Dr Christodoulos Patsalides
In the world of banking, long periods of profitability can dull the instinct to reassess risk.
When financial institutions experience years of stable returns and upward-trending profits, there is a natural tendency to normalise those conditions.
This is especially true when a big chunk of profits emanate from unusually favourable monetary conditions.
Assumptions about asset quality, liquidity, borrower behaviour, and market volatility become embedded in models
