The expectation, since the financial crisis, has been that regulators will somehow take care of systemic risk. The problem with that rather blithe assumption is that the system they are expected to police is very, very big.

With the best will in the world, no regulator, even if given all the resources they ask for - and few are - can look in every direction at once. What if, while they are not unreasonably busy looking at obvious sources of risk such as bank balance sheets or derivatives trading, the next market shock blows in from an unexpected direction?