Banking Stress Testing

Stress Testing: What Banks Need to Know to Meet Today’s Requirements

Dodd-Frank Act stress-testing (DFAST) requirements can pose significant challenges to banks of all sizes. DFAST is currently mandated by the federal bank examiners for banks with more than $10 billion in assets, but regulators say banks of all sizes should be able to analyze how adverse events could affect their financial conditions.

Most observers expect that banks with less than $10 billion in assets eventually will be subjected to regular stress testing as well. In one recent webinar attended by roughly 300 bankers, auditors, regulators, and consultants, more than 85 percent of the participants said they believe stress testing will become a regular practice for all banks.

Crowe Horwath LLP offers stress testing consulting services that complement a powerful proprietary tool that helps banks analyze their current state and meet the expanded Office of the Comptroller of the Currency (OCC) Dodd-Frank Act stress-testing (DFAST) requirements.

DFAST: Achieving Long-Term Value

As a practical matter, banks need to address three critical areas of concern:

Enterprisewide Integration
Coordinate closely among finance, treasury, risk, credit, and IT departments as well as the various business lines.
   
Know Your Portfolio   Know Your Scenarios   Know Your Forecasts
Take an integrated and common view from business units to the entire enterprise.   Perform dynamic assessments of multiple shocks and recoveries, including both regulator-provided and bank-defined scenarios.   Conduct analyses of portfolio metrics and forecast changes for each scenario from the perspective of all users including business units, operations, management, executives, board, and examiners.

Successful stress testing requires the ability to effectively integrate enterprise data with complex macro-scenario forecast models. Crowe Horwath LLP offers stress testing consulting services that complement a powerful proprietary tool that helps banks analyze their current state and meet the expanded Office of the Comptroller of the Currency (OCC) Dodd-Frank Act stress-testing (DFAST) requirements.

Learn More: