Scenario-Based Risk Management: Overcoming the Challenges

As regulatory stress test regimes mature – and stakeholders grow more comfortable with managing testing processes and interpreting results – financial institutions will look to expand their use. The technologies deployed to meet growing regulatory requirements
can deliver tremendous additional business value, especially for scenario-based risk management.

However, significant human resource, technical and operational challenges hinder the use of regulatory stress testing technologies for scenario analysis – and stress tests are already straining the capacities of company staff and IT systems. This paper explores how financial institutions can use technology to:

• Address some of the key challenges of extending enterprise stress testing processes to support scenario-based risk management.
• Operate much more efficiently.
• Derive greater business value from their stress testing investments.