7206404mostPGMClosedGRD Development of PrototypeInnovate UKLarge national and international banks, and insurance companies are increasingly required by their regulators, shareholders and ultimately customers to ensure they can continue operations under economic stress. The recent “Great Recession” (2008-13) has brought into sharp focus the need for improved approaches to estimate the amount of capital and provisions needing to be held in a range of situations. At present approaches focus on a combination one-size fits all regulatory models based on over-simplified models of economies (e.g. the Vasicek formula that underpins the Basel II & III international accord) or ad-hoc estimates based on a narrow range of bland potential scenarios (e.g. 1:25 year recession). Large financial institutions currently typically have no systematic approach to estimating what would happen in possible but extreme scenarios such as UK exit of EU, virus pandemic or allout war in Ukraine, nor an understanding of the “boundary surface” of extreme scenarios under which the bank could fail – known as reverse stress testing and a key requirement of UK and international risk regulation. The great problem with regulating banks and other financial institutions is that it is easy in retrospect to prevent the last crisis. What regulators and bank management have consistently failed to do is to be well prepared for the next one. Regulators internationally are increasingly demanding banks to be forward looking in their risk assessments. 4most Europe Ltd seek to help Banks and other financial institutions to be better prepared ‘what-if’ scenarios and to meet the stringent regulatory standards by developing a cloud based Probabilistic Graphical Model (PGM) tool tailored to estimating stressed economic parameters. This will enable banks and other financial institutions to be better prepared for possible but severe scenarios and hence reduce exposure to cataclysmic disruptions of the financial system, which clearly has a very large global social benefit