Bearing · Output artefact

Bearing Cycle 2 · Swiss FINMA · Reverse stress test

Archetype Swiss CHF universal bank
Framework FINMA supervisory (Risk Monitor 2025)
Type Reverse stress test
Cycle 2
Production-grade analytical output artefact. Composed by Bearing against an institutional position; supervisor-prescribed CET1 depletion read backwards through one entangled configuration and an ordered four-channel cascade. Not a forecast. A measurement.
P Predictive History Method ™ REVERSE STRESS TEST · FINMA FINMA RISK MONITOR 2025 · 16 MAY 2026

REVERSE STRESS TEST · FINMA SUPERVISORY FRAMEWORK · RISK MONITOR 2025 CONTEXT

Reverse stress
test,
Swiss book. A thinking instrument for the supervisor-prescribed depletion, read backwards through one entangled configuration.

EXERCISE FINMA supervisory framework · Risk Monitor 2025 risk landscape SUBJECT A mid-sized FINMA-supervised Swiss bank (archetype) [MODELLED] ANCHOR A supervisor-prescribed CET1 depletion outcome [SUPERVISOR-PRESCRIBED] METHOD Reverse spine · entangled configuration · ordered four-channel cascade · trigger apparatus · A/B what-if BOUNDARY The artefact is anonymised throughout, so no institution name appears and every modelled figure carries its tag in-line.
01 /
PRESCRIBED
FAILURE

The supervisor sets the depletion outcome. The instrument reads the path backwards.

REVERSE SPINE
READ UP THE SPINE
PRESCRIBED CET1 DEPLETION · ARCHETYPE
~300bp supervisor-
prescribed
STATUSPRESCRIBED INPUT
PROVENANCESUPERVISOR · SUPERVISOR, FINMA SUPERVISORY CONTEXT
METHODNOT A Bearing CLAIM · NOT COMPUTED

A reverse stress test starts from the failure and reads backwards to the configuration that gets there.

The ~300bp number is an archetype: the supervisor's given, not a Bearing computation. The instrument's question is not how much — it is through what plausible configuration of the world a book like this one arrives at a depletion of that order, and through which transmission channels. The reverse spine inverts a self-diagnosis.

That re-framing is the whole point. A reverse spine does not require a probability; it requires a coherent path.

↓ READ DOWN THE SPINE · CONFIGURATION → CHANNELS → TRIGGERS → BRANCHES
02 /
ENTANGLED
CONFIGURATION

One coherent system, not five signals.

REVERSE SPINE
READ UP THE SPINE
CONFIGURATION · IRAN/US · HORMUZ · RUSSIA/UKRAINE · XI/TRUMP · TURKEY CFG-01 · ENTANGLED · SINGLE CONFIGURATION
Russia/UA DISRUPTION CORE load-bearing locus Iran/US PROXIMATE TRIGGER Hormuz SUSTAINING INCENTIVE Xi/Trump MODULATOR Turkey OPPORTUNISTIC PERIPHERAL Adjacent vector DORMANT · PENDING PROXIMATE SUSTAINS MODULATES UNDER COVER OF DORMANT VECTOR LOAD-BEARING LINK MODULATING DORMANT / PERIPHERAL
LOAD-BEARING MECHANISM
Russia's war-economy incentive sustains Hormuz disruption; China's stated Iran-resolution preference modulates it; Turkey/Eastern-Med moves opportunistically under cover.

The configuration is a system, not a list. The instrument refuses to enumerate five separate signals, because the credible depletion path is one where they hang together; mutually reinforcing.

The particular position this reaches in the Swiss context is the CHF safe-haven balance sheet with a domestic mortgage cluster, an energy-intensive corporate book, and a securities book carried at fair value. The four channels below are how the same configuration transmits — not as four parallel stress paths, but as one ordered cascade.

04 /
FOUR
CHANNELS
ORDERED
CASCADE

Four channels. One ordered cascade.

READ TOP TO BOTTOM
CH·01 PROTECTIVE → CH·04 TERMINAL

These are not four parallel stress paths. They are one ordered transmission cascade, read in order — and the order is the argument. CH·01 is the protective link. CH·02 is the one instrumented channel. CH·03 is where the displacement reaches the securities book. CH·04 is where the cascade closes on itself through an endogenous internal link.

ORDERED TRANSMISSION CASCADE · SELECT A CHANNEL CFG-01 · SWISS POSITION
CH·01 · PROTECTIVE

Sovereign–bank nexus · CHF safe-haven

MECHANISM + PRECEDENT + TRIGGER
MECHANISM

Safe-haven CHF strength is protective on the sovereign and funding axis — and that protection is the first link of the cascade, not the end of it.

A geopolitical risk-off pulse routes flows into CHF assets. On the sovereign and funding side this dampens: deposits are sticky, the sovereign book does not re-rate against the bank, there is no domestic doom-loop. This is the mechanical content of "Swiss banks are less vulnerable to general shocks" — and it is why the sovereign-fragility path to the prescribed depletion is structurally closed here.

But the same flow that dampens the sovereign axis does not dampen the rest of the book: CHF appreciation re-marks the international and EUR/USD-denominated assets, EUR/CHF basis-swap costs widen against the funding side, and net-interest-margin compresses through deposit-floor and lending-spread mechanics. The transmission shape is the asymmetry — the franc's strength protects one axis and is the entry mechanism on the others. The shock is not absorbed; it is displaced. Where it lands is CH·02 and CH·03; how it closes on itself is CH·04.

CHF SAFE-HAVEN CHANNEL · PROTECTIVE-THEN-DISPLACING MECHANICS [CORPUS]
PRECEDENT (DEPLETION SHAPE, NOT MAGNITUDE)

SNB EUR/CHF floor removal — 15 January 2015.

EUR/CHF moved from 1.20 to ≈0.85 intraday on the SNB announcement; Swiss bank equities sold off 10–14% over the session; leveraged FX-margin books took mark-to-market losses inside the day. That is the depletion shape the prescribed-failure number resembles, not a magnitude Bearing derives.

SNB 15 JAN 2015 ANNOUNCEMENT PRECEDENT [CORPUS]
TRIGGER

Observable, not yet instrumented in this channel.

The trigger this channel watches is the joint EUR/CHF and 3M EUR-CHF basis-swap state under Hormuz-disruption risk-off conditions. No σ is asserted here, because the live instrument that would justify a σ does not exist for this channel in this cycle. The honesty of saying so is the depth.

WATCH · CHF BASIS / EUR-CHF STATE [CORPUS]

Closing read · cascade inversion
The protection on one axis is the mechanism of the vulnerability on another.

05 /
TRIGGERS

The detection apparatus — which way the configuration is resolving.

LIVE AS-OF 16 MAY 2026 · 09:00 CET
STATE, NOT SCORE
TRIGGER MAP · PER CASCADE STEP · CURRENT STATE AS-OF TIMESTAMPS EXPLICIT · DORMANT HONESTLY STYLED DORMANT
CH·01 · CH·01 · CHF basis / EUR-CHF state — protective link
Watched for: [observable condition placeholder — the joint state under which the protective reading is held or has broken]. The mechanism is protective; the watchable is whether displacement onto CH·02 / CH·03 is the active question.
PRE-ACTIVATION · AS-OF 16 MAY 2026 · 09:00 CET [CORPUS]
CH·02 · CH·02 · Hormuz live instrument
Watched for: [transition out of the measured σ-state on either leg]. This is the channel where the apparatus is instrumented, not declared.
ACTIVE · AS-OF 16 MAY 2026 · 09:00 CET [CORPUS] [RECONSTRUCTED]
CH·03 · CH·03 · EUR/CHF + EUR credit-spread state — displacement
Watched for: [observable condition — the re-marking concurrent with the named external state]. The analogue cycle is the calibration line; the live state is observable above the line.
PRE-ACTIVATION · AS-OF 16 MAY 2026 · 09:00 CET [CORPUS]
CH·04 · CH·04 · SNB rate + SREB index — endogenous-feedback terminal
Watched for: [reaction-function trajectory and the inflated surface moving in feedback alignment]. Dormant as a macroprudential trigger; load-bearing as the cascade terminal.
DORMANT · LOAD-BEARING · AS-OF 16 MAY 2026 · 09:00 CET [CORPUS]
06 /
WHAT-IF

The thinking space — A illustrative · B method.

FIRST-CLASS LAYER
A/B SEAM DRAWN ON THE SURFACE
A

Illustrative grounded branches off the entangled configuration — how Bearing reads it resolving.

Bearing-AUTHORED
THREE BRANCHES · ILLUSTRATIVE
Persists A · 01
TRANSITION CONDITION
[Transition condition placeholder. A specific, observable change in the configuration — a step in one of the load-bearing relationships above.]
CASCADE MOVEMENT
[Cascade movement placeholder. CH·01 protective link holds. CH·02 stays at the measured σ. CH·03 begins to track the analogue. CH·04 feedback wiring deepens without firing.]
OBSERVABLE COUNTERFACTUAL
[Observable counterfactual placeholder. The condition that would have to be true on a specific date for this branch to be wrong.]
ILLUSTRATIVE NOT EXHAUSTIVE NOT PROBABILITY-WEIGHTED
De-escalates A · 02
TRANSITION CONDITION
[Transition condition placeholder. The configuration shifts toward resolution — the central node narrows, the modulator acts, the sustaining incentive does not break but the locus shifts.]
CASCADE MOVEMENT
[Cascade movement placeholder. CH·02 σ-state transitions toward de-escalation; CH·01 protective link continues to hold; CH·03 does not cross the analogue transition; CH·04 feedback wiring slackens.]
OBSERVABLE COUNTERFACTUAL
[Observable counterfactual placeholder. The live-instrument leg de-escalates without CH·04 crossing into terminal-active in the same window.]
ILLUSTRATIVE NOT EXHAUSTIVE NOT PROBABILITY-WEIGHTED
Widens A · 03
TRANSITION CONDITION
[Transition condition placeholder. Disruption deepens; the peripheral signal moves opportunistically; the protective mechanism imports an endogenous response that pulls the terminal surface into the loop.]
CASCADE MOVEMENT · IN ORDER
[Cascade movement placeholder. The cascade moves in order, not concurrently. CH·01 protection holds. CH·02 escalates on the focal leg. CH·03 displacement intensifies. CH·04 feedback wiring closes against the inflated surface — the cascade reaches the prescribed depletion through CH·01 staying protective, not breaking.]
OBSERVABLE COUNTERFACTUAL
[Observable counterfactual placeholder. The displacement intensifies and the live instrument does not de-escalate inside the same window, while CH·01 protection still holds — the cascade reaches CH·04 through CH·03, not through CH·01 breaking.]
ILLUSTRATIVE NOT EXHAUSTIVE NOT PROBABILITY-WEIGHTED
A / B
SEAM
A is how Bearing reads this resolving — illustrative. What follows is the method to read it against your book — yours to run. The branches above are worked examples; the procedure below is the engine the subject operates on its own exposures.
END · A
BEGIN · B
B

The branch-construction method — the engine the bank runs.

SUBJECT-EXECUTED
FIVE STEPS · PER BRANCH
B · 01
Identify a transition condition
[Step description placeholder. Name a specific, observable change in the configuration. Not a vibe; a condition that could be true or false on a date.]
RUNS AT: CONFIGURATION LAYER
B · 02
Trace through the cascade — in order
[Step description placeholder. Walk the condition through the four channels in cascade order. CH·01 protective: does the link hold? CH·02 measured: read the instrument. CH·03 displacement: read the mechanism, name the analogue. CH·04 terminal: state the feedback wiring state. In order, not concurrently.]
RUNS AT: CASCADE LAYER
B · 03
Name the observable counterfactual
[Step description placeholder. For the branch to be wrong, what would have to be true? State the counterfactual as an observation that could be made on a date — not a forecast.]
RUNS AT: TRIGGER LAYER
B · 04
Test against your own exposures
[Step description placeholder. Run the traced channel against your actual exposure data — at the subject's own book. Bearing does not see it.]
RUNS AT: BOOK LAYER · SUBJECT-SIDE
B · 05
Self-diagnose against capital mechanics
[Step description placeholder. Close each channel to a capital number using the subject's own mechanics; aggregate to a depletion estimate and self-diagnose against the prescribed outcome. The gap that remains is where the diagnosis lives.]
RUNS AT: CAPITAL LAYER · SUBJECT-SIDE
ENGINE OPERATOR: THE SUBJECT EXECUTED AGAINST: YOUR BOOK · YOUR CAPITAL MECHANICS · YOUR RISK-DATA LINEAGE
07 /
BOUNDARY

The Bearing / bank boundary, on the surface.

CANNOT-BE-WRONG POSTURE
MADE VISIBLE, NOT IMPLIED
Bearing DELIVERS

What sits this side.

  • CONFIGURATION The entangled system, named with its load-bearing mechanism.
  • ORDERED CASCADE The four channels at four honest depths, wired as one ordered transmission — CH·01 protective → CH·04 terminal. Not a parallel set.
  • BRANCHES (A) The illustrative grounded branches — labelled illustrative, not probability-weighted.
  • METHOD (B) The procedure the bank executes — five steps, drawn on the surface, no black box.
  • MEASURED σ The one channel where Bearing holds both configuration and live instrument. σ 1.85, p .032, derivation visible.
  • MARKED SEAM The point where the macro cascade meets a confidence / idiosyncratic accelerant — marked below with the public shape, not resolved. Bearing marks; the bank concludes.
THE BANK DELIVERS

What sits the other side.

  • EXPOSURE DATA Energy-intensive corporate, leveraged finance, CHF sovereign + safe-haven position, securities book at fair value, residential mortgage cluster — all bank-side.
  • CAPITAL MECHANICS The closures from cascade read to capital number. Bearing does not compute these on your behalf.
  • RDA LINEAGE The risk-data-aggregation lineage the supervisor grades, against this bank's own dimensions.
  • SELF-DIAGNOSIS The reading of the branches and method against this bank's book — the verdict, if there is one, is bank-side.
SUPERVISOR CAVEAT · ON-SURFACE
Supervisory sufficiency is a FINMA bilateral supervisory determination, bank-by-bank. This instrument does not imply pre-validated compliance, does not bind the FINMA determination, and does not substitute for the bank's own internal capital-adequacy narrative. It is a structured space for the bank to reason about its own failure pathways and self-diagnose against its own book.
MARKED ACCELERANT SEAM · §07
Where the macro cascade meets a confidence / idiosyncratic accelerant — and the instrument stops.

The ordered cascade carries displaced marks to the edge of the prescribed depletion. It does not close the depletion on its own. The public shape the seam tracks is the Swiss large-bank capital event pattern — the 2008 UBS capital event and the 2023 Credit Suisse resolution both closed through a confidence and idiosyncratic accelerant on top of macro stress, not through a pure macro cascade. The macro robustness held in both cases and was irrelevant to the outcome.

Whether this bank carries the accelerant fragility — governance position, funding-stability, concentration — is the bank's ICAAP self-diagnosis, not a Bearing read.

Bearing marks. The bank concludes. [CORPUS]
Predictive
History
Method

Bearing · REVERSE STRESS TEST DELIVERABLE

A thinking instrument for a mid-sized FINMA-supervised Swiss bank, inside the 2026 ICAAP geopolitical-risk exercise. One entangled configuration as the plausible path to a supervisor-prescribed CET1 depletion.

PROVENANCE

All exposure figures are [modelled] archetype values. No institution name appears. Corpus citations [corpus]; reconstructed σ-units [reconstructed].

CYCLE 2 · SWISS FINMA

16 MAY 2026 · CFG-01 · SINGLE CONFIGURATION · ORDERED TRANSMISSION CASCADE.

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/icaap
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