S&P puts capital adequacy under the spotlight

Major changes to the way it models affected companies are set to be outlined for review in July, when the provider of financial data will look for industry feedback. One of the objectives of the changes will be to make S&P’s modelling more sensitive to current risk. Since introducing its current model for calculating risk in the early 1990s, S&P says increasing complexity of products and changes to volatility of risk mean it must update the way it does its calculations. What this means in practices is explained thus: “When the new model has been implemented, S&P will estimate target ca...