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Banking risk management survey 2012 – EY – Banking & Capital Markets - EY - Global

Bank risk management survey 2012

Stress testing

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“Our internal stress tests go way beyond what is required by the regulators.”

Internal stress-testing strategies, systems and procedures have strengthened due to the evolving regulatory and market environment.

Most agree that stress-testing methodologies have become valuable tools to navigate the volatile global and economic landscape. In fact, 75% report they’ve created and implemented new stress-testing processes in the past 12 months.

Firms continue to implement new stress tests


Firms continue to implement new stress tests

Respondents also note a larger emphasis on integrating internal stress testing at the group level and developing enterprise-wide models. One respondent summarizes the change as moving an “ad hoc activity” to an “institutionalized and productionalized” function.

Organizations are using a variety of stress testing methods, with scenario planning being the most popular.

Scenario planning has become an increasingly important tool to help boards and senior executives consider and assess the full range of issues that could arise. Yet, respondents also feel stress-testing approaches can get out of hand and be overly complex.

Some changes include using the results of stress testing for strategic management decisions. Like other focus areas, inadequate monitoring and reporting systems, and the demand on resources to execute stress testing, are highlighted as challenges.

However, this year’s survey finds considerable progress has been made.

Risk areas of increased focus over the past 12 months


Risk areas of increased focus over the past 12 months

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Contacts

  • Bill Schlich
    Global Banking & Capital Markets Leader
    +1 212 773 3233
  • Patricia Jackson
    Head of Financial Regulatory Advice for EMEIA Financial Services
    +44 20 7951 7564
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