Ways to Leverage Portfolio Stress Testing Results
While megabanks have stringent and detailed portfolio stress testing requirements, many community banks and credit unions have received little prescriptive guidance on how to effectively stress test the loan portfolio. While stress testing is widely accepted and purported by examiners to be a critical component of a “sound risk management framework”, expectations and use cases for stress tests aren’t obvious.
Emphasizing the importance of stress testing in sound decision-making, the FDIC states that “during times when losses are minimal and property values are rising, stress-testing assessments of riskier assets and concentrated positions can help management anticipate potential risks arising from lower-than-expected obligor cash flows, deteriorating local or regional economic circumstances, or declining real estate values.”
Join this webinar to learn:
- The importance of leveraging portfolio stress testing results
- Feedback from examinations that clients are permitted to share
- How bottom-up and top-down stress testing results can influence capital adequacy, risk management, and lending decisions
Ways to Leverage Stress Testing Results in the Portfolio-20191218 1900-1
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