Stress Testing


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Stress Testing

A process, usually computerized, that evaluates an institution's reaction to different situations. Specifically, stress testing measures whether the institution has adequate capital and/or assets to respond effectively to various, adverse scenarios presented by the computer program. Stress testing became particularly important in the United States in the spring of 2009 when Treasury Secretary Timothy Geithner conducted a series on troubled American financial institutions to determine which were able to raise private capital and could therefore begin repaying TARP funds extended the previous year.
References in periodicals archive ?
2014a) "Falling Short of Expectation: Stress Testing the Eurozone Banking System.
We don't think that we need this whole new stress testing regime.
Boyle, Consulting, has developed an expertise in applying Stress Testing and Scenario Testing, drawing from many different resources.
Since the main focus of stress testing is credit risk, loan losses are the main driver of the impact on banks' profits and capital adequacy.
They will assess the adequacy of banks' reviews of counterparty creditworthiness, exposure measurement and monitoring techniques, stress testing, limit setting, and the appropriate use of collateral and other credit enhancements.
Our database and modeling adds significant value when we work with individual client banks on customized stress testing.
Despite the literature, the American Heart Association has published a series of guidelines for preoperative cardiac risk assessment; it continues to recommend stress testing for a significant number of patients," said Dr.
Banks are also moving to develop more realistic counterparty credit-risk-exposure measures including the development of various types of stress testing of their credit-risk exposures to major counterparties.
We view stress testing as an essential and important component of sound risk management practices, analyzing, and viewing positively multiple approaches to stress testing.
In a speech titled "Effectively implementing a value adding enterprise-wide stress testing framework," Masschelein advised on the following steps to effective implementation:
Ardmore Banking Advisors' deep expertise in credit and regulatory needs will help these banks establish their first CRE stress testing programs, even under tight deadlines.