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Article
Geopolitics Breaks Models Before Markets Break
Krishan Sharma of Citi argues that traditional risk models are structurally unfit for fast-moving geopolitical shocks. From regime-switching stress tests to Bayesian overlays and dynamic model maps, he outlines how firms must rethink calibration, connectivity, and governance to capture velocity, persistence, and cross-risk amplification.
Feb 23, 2026
Krishan Sharma, SVP, Model Risk - Regulatory Stress Testing and Capital Forecasting, Citi
Tags:
Model risk
The views and opinions expressed in this content are those of the thought leader as an individual and are not attributed to CeFPro or any other organization
- Traditional models
assume stationarity and fail under structural geopolitical breaks
- Stress testing must
focus on velocity persistence and regime switching
- Reverse stress
testing identifies liquidity breaking events
- Integrated scenarios
needed to capture cross risk amplification
- Bayesian overlays
reduce false precision in qualitative risk
- Model dependency
mapping strengthens enterprise resilience
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