Regulatory Alerts2011-08-04
Added · Updated
Sound Practices for Stress-testing
The document establishes sound practices for stress-testing, requiring institutions to assign dedicated committees with clear mandates for scenario design and risk mitigation. It mandates an enterprise-wide, scenario-based approach that incorporates forward-looking, remote but plausible events, reverse stress-testing, and expert judgment to identify vulnerabilities. Furthermore, it requires robust control procedures and flexible infrastructure to ensure reliable, timely generation of stress-testing outputs for critical decision-making.
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