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Volume 30, Issue 1

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Friday, 24 May 2013 13:35

Stress Testing and Data Collection

In the wake of the most recent financial crisis, considerable emphasis has been placed on financial institutions performing reasonable stress testing procedures as part of their risk management and capital planning processes. While the focus primarily has been on the largest financial institutions with measures like the introduction of the Supervisory Capital Assessment Program, or SCAP, in early 2009, additional and more recent guidance seems to indicate that this will be something that all financial institutions, regardless of size, will be asked to do.

Sourcing and updating adequate data is one of the most crucial aspects of developing and maintaining a reliable stress testing process. The ability to incorporate updated and relevant data for the stress tests will provide financial institutions, regardless of size, with significant benefits as they strive to identify and mitigate potential risks in their loan portfolio over time.