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In its latest report, PwC Luxembourg warns that traditional risk models are falling short and calls for greater use of reverse stress testing to tackle systemic global threats.
The report, 'Managing Systemic Risks in the 21st Century', identifies five major ‘megathreats’ — climate change, technological disruption, geopolitical instability, demographic shifts, and sovereign debt crises — that pose growing risks to financial stability. These are explored through six high-impact scenarios, including the drying of the Panama Canal, a coordinated BRICS sovereign debt cancellation, and a bursting of the AI investment bubble.
The report argues that the continued reliance on...
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