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Stress Testing: Why It Shouldn’t (and Won’t) Go Away

Recent discussions suggest easing of legislative requirements related to stress testing, but prudent stress testing is an important risk management tool for financial institutions. Stress testing, as part of overall best practices for mitigating financial institution risk, can provide the board and management with key decision-making information on capital allocation and other decisions driving the achievement of long-term goals.

“Prudent stress testing as a broader risk management tool is unlikely to go away,” said Dave Koch, Managing Director of Abrigo’s Advisory Services. “Community FIs will still be required to demonstrate stress-testing capabilities across the enterprise, even for a community financial institution with less than $10 billion in assets that is not a big risk taker.”

Download the whitepaper to learn:

  • How Congress may be altering the Dodd-Frank Act’s requirements around stress testing and what the will mean for FIs
  • Why stress testing is still beneficial for survival and growth
  • Ways that your institution can implement a broader stress testing program that improves risk management