Objectives On completion of this tutorial, you will be able to:

• Define the key concepts associated with stress testing, including the difference between stress testing and sensitivity analysis
• Identify the key elements of a bank's stress testing framework, including the testing process itself
• Recognize the benefits of regulatory macro stress tests for the banking industry

Tutorial Overview The global financial crisis damaged the reputation of some risk measurement techniques, including stress testing. But the response by banks and regulators was not to abandon stress testing, but instead to strengthen and extend it. This tutorial describes how the practice of stress testing has developed within banking risk management in recent times and highlights its importance today. It also addresses the different types of stress test in terms of both institutional and regulatory contexts. Prerequisite Knowledge Risk Management - Tools & Techniques Tutorial Level: Intermediate Tutorial Duration: 75 minutes