Stress Testing

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Overview

Aims and Objectives

This course illustrates how to effectively develop, design, manage and measure a stress testing program within an institution. Participants will develop a detailed understanding of the differences between stress testing and scenario analysis and learn how to design scenarios that are reasonable and actionable.

Additionally, the course discusses the integration of stress testing within a bank’s enterprise-wide risk management framework, with specific emphasis on strategic planning, risk appetite, capital adequacy, ICAAP and contingency planning.

Emphasis will be attributed to stress testing liquidity (funding and market liquidity). Practical exercises will span between complying with the Basel III regulatory stipulations and the scenarios identified by some sample institutions to be highly relevant in the current regimes. The exercises will analyse the impacts on the key regulatory ratios such as T1 and Core T1, LCR (liquidity coverage ratio), NSFR (net stable funding ratio) and LR (leverage ratio). Sample “impact sheets” on P&L and balance sheet structures will be part of the output deliverables.

Specifically, the course will help participants design effective stress tests based on suitable scenarios to their respective institutions. Participants will develop reverse stress testing algorithms and back test them to match economically viable scenarios via in-class exercises using Excel spreadsheets.

The course provides new insights into the common challenges of stress testing, including reverse stress testing, stress testing key models used for asset liability management and how to communicate results to management, the board and regulators. The learning will be delivered through a combination of presentations and interactive case studies.
 
Programme objectives:

  • Understand the difference between stress and scenario testing and the benefits of each
  • Learn how to develop reasonable tests and stress test reports
  • Learn how to use stress testing and scenario analysis to inform capital adequacy and integration into the bank’s ICAAP
  • Effectively communicate results to management and the board
  • Explore the challenges in developing a stress testing program including the challenges of developing reverse stress tests, data, correlations, and incorporating results into managing the bank
  • Use stress testing and scenario analysis in enterprise risk management including integrating into management decision making such as strategic planning, informing risk appetite, and contingency planning
  • Develop a checklist with “take-aways” for immediate application at their institution

 

Inhouse

We can bring this course to your company's office.

If you simply want to run this course at a location convenient to you or if you want a completely customised learning solution, we can help.

We produce learning solutions that are completely unique to your business. Our tailored learning solutions are designed specifically for your organisation’s needs.

We’ll be here to support you every step of the way. From the initial consultancy through to evaluating the success of the full learning experience. We'll ensure you get the maximum return on your training investment.

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Why us


We have a combined experience of over 60 years providing learning solutions to the world’s major organisations and are privileged to have contributed to their success. We view our clients as partners and focus on understanding the needs of each organisation we work with to tailor learning solutions to specific requirements.

We are proud of our record of customer satisfaction. Here is why you should choose us to help you achieve your goals and accelerate your career:

  • Quality – our clients consistently rate our performance ‘excellent’ or ‘outstanding’. Our average overall score awarded to us by our clients is nine out of ten.
  • Track record – we have delivered training solutions for 95% of worlds’ top 100 banks and have trained over 250,000 professionals.
  • Knowledge – our 150 strong team of industry specialist trainers are world leading financial leaders and commentators, ensuring our knowledge base is second to none.
  • Reliability – if we promise it, we deliver it. We have delivered over 20,000 events both in person and online, using simultaneous translation to delegates from over 180 countries.
  • Recognition – we are accredited by the British Accreditation Council and the CPD Certification Service. In an independent review by Feefo we scored 96% on service and 95% on product