Stress Testing Integral to US Banks’ Ongoing Operations

CRISIL GR&A hosts roundtable for banks, regulators to discuss importance of risk management
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Stress Testing
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July 5, 2012 - PRLog -- Stress testing and model risk management should ideally be an integral part of banks’ ongoing operations and not looked upon as compliance issues, averred representatives from the banking industry and the regulatory agencies at a roundtable held in San Francisco on Wednesday, June 27. Hosted by CRISIL Global Research and Analytics (GR&A), the world’s largest and top-ranked provider of high-end research and analytics services, the roundtable was attended by the senior officials of banks around the San Francisco Bay Area and representatives from the Federal Deposit Insurance Corporation and the Federal Reserve Bank.

The key stakeholders at the roundtable agreed that analyzing a bank’s financial performance to assess the potential impact of various adverse events and circumstances, relevant to its size, scale and complexity, can strengthen the bank’s risk management function and help in proper planning for economic and regulatory capital. They also agreed upon the fact that the risk management architecture needs to be constantly updated and calibrated on an ongoing basis to reflect the evolving liquidity and solvency levels at an organization level.

The participants also placed equal importance on a regular and rigorous process of model validation, which is essential for reaching an accurate outcome of stress tests, revealing the exact quantum of risk faced by banks.

“In its effort to bring greater transparency to the ways markets operate, leading them to function better world over, CRISIL GR&A has been creating platforms such as this for exchange of ideas and for stakeholders to discuss and debate relevant issues. The roundtable was organized with the aim of facilitating a constructive dialogue between the participants on emerging regulatory and risk challenges,” says Gurpreet Chhatwal, Senior Director and Global Head, Risk and Analytics, CRISIL GR&A.

CRISIL Global Research & Analytics (GR&A) is a top-ranked provider of high-end research and analytics services. Its strong risk, quantitative, derivatives and actuarial specialists help clients apply incisive analytics to internal models, transition to more robust risk and trading platforms, measure risk in a more real-time manner, and comply with regulatory requirements including model validation, stress testing, and Solvency II. CRISIL GR&A’s team operates from research centres in Argentina, China, India, and Poland and its clients include 12 of the top 15 global investment banks, 3 of the top 15 global insurance companies and 37 Fortune 500 companies.

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