What do you do if you want to digitalize your risk management processes? For a start, firms need to take a top-down, big-picture approach that makes use of explainable machine learning. Then there are three core steps: readying your formulaic dependencies – e.g., calculation of NII, RWA, ECL, LCR/NSFR and capital ratios from underlying scenario variables; preparing for scenarios you’ve seen before (whether good or stressful); and learning how to deal with dependencies, shocks, and consequences you’ve never seen before. For more, check out Alla Gil’s latest column in GARP, which you can read here.