Regulation & ComplianceWolters Kluwer releases “stress test” guidelines

Wolters Kluwer releases “stress test” guidelines

The financial services firm Wolters Kluwer has published a white paper giving best practice guidelines on how financial institutions can boost their risk management efforts through stress testing.

The financial services firm Wolters Kluwer has published a white paper giving best practice guidelines on how financial institutions can boost their risk management efforts through stress testing.

Called Reinforcing Market Confidence with Consistent Stress Testing, the paper lays out ways to create a more integrated and strategic approach to the issue, says the firm. In particular, it explores how unified financial risk analysis can help companies avoid the pitfalls of silo-based analysis by rolling out stress tests that are consistent and transparent.

Stress testing has become a hot topic for regulators and other industry commentators anxious to protect against future crashes or large-scale losses. It is hoped that, by demonstrating a commitment to managing risk exposure, financial institutions can also claw back public and consumer confidence, which is still at a low. However, with a fifth of European banks failing the European Central Bank’s recent stress test assessment, it seems that many organisations still have a long way to go.

Knowing the very significant role that financial institutions play, it is critical to ensure that the financial system is capable of working efficiently not only under expected but also under unexpected, extreme conditions and been robust to absolve turbulence and losses; whereas having steady growth in profitability,” said Ioannis Akkizidis, global product manager at Wolters Kluwer Financial Services. “Stress testing helps organisations measure this capability.

This white paper examines how certain risk factors within an organisation frequently intersect with each other, making it imperative to consider these integrations when designing effective and meaningful stress testing scenarios,” he added.

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