The tool follows a step-by-step climate resilience framework inspired by existing good practice risk management models.

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The principles also govern internal risk management models and regulatory capital models.

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Also, when things went wrong, and the risk-management models flashed red, the firm could not unwind its positions as quickly as the model had assumed.

ECONOMIST: A new approach to financial risk

The suggested revision adds two ideas to the same basic regime: in deciding how much capital is needed, make greater use of, first, credit-rating agencies' measures of risk and, second, banks' internal risk-management models.

ECONOMIST: Economics focus

CRISIL, an impressive outfit, is furthest down this path with half its sales from abroad, mainly from helping banks with equity research and risk-management models, demand for which has soared thanks to more regulation in the rich world.

ECONOMIST: Credit-rating agencies

Risk management consultants say the models that banks use to predict the risks of their exposures don't work in these so-called "fat-tail" events, shocks that move otherwise predictable swings outside the parameters of clever computer programs and their keepers.

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But there is no doubt that the summit's action plan includes a long list of financial sector dimensions to be addressed, including: accounting standards, hedge funds, risk disclosures, financial sector assessments, credit rating agencies, risk-management and stress-testing models, international standard setters, sanctions for misconduct, reporting to supervisors in different countries, and more.

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Mazelis said that most cat models are run by an actuary and the most popular, from Risk Management Solutions, takes a long time.

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