June 2007 Capital Adequacy Extension © Copyright 2007, CCRO. All rights reserved. Page 91 of 92 actions under dynamic conditions and thus create a reasonable simulation of how the firm’s equity will evolve from one period to the next under different scenarios. This risk horizon extension allows us to expand the capital adequacy framework to address not only short-term capital and liquidity requirements but also the very important long-term risk issues that the firm faces.