ABSTRACT
The first line of defence creates a protection from extreme risk exposure at the strategic level. At the same time, the first line of defence also helps to detect the areas where the extreme risk is likely to be sitting. These areas are where the business and risk knowledge is shallower and control over the risk drivers is weaker. On a map of the business ‘genome’, these areas are located outside the comfort zone. In fact, in the absence of reliable models for extreme risk assessment, the analysis of the ‘genome’ helps to create awareness about the areas and products that require a constant monitoring for extreme risk events. This is a first step to having the proper AAA approach in place.
