Taking The Stress Out Of Stress Testing: Six Steps Towards A More Coherent Framework
Posted: 4 September 2008 | Source: SunGard
Improving stress testing is at the top of bank executives’ must-do lists for 2008. Regulators will work hard to keep it there because the ongoing credit crunch has highlighted many gaps in bank risk management that better stress testing can help to mend.
Another driver is Pillar II of Basel II, which makes stress testing a vital tool for extending risk analysis into areas not covered by Pillar I minimum capital requirements and for testing bank assumptions about worst-case scenarios.