Decrease your risk by being informed. This may be great sleepytime reading (better yet, a way to defeat insomnia), but it’s important to never rest or relax in a competitive environment. Know your stuff, and use it.
A typical application of stochastic forward sensitivities is the exact calculation of an initial margin valuation adjustment, assuming the initial margin is determined from a sensitivity- based risk model. The ISDA Standard Initial Margin Model is an example of such a model.
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