BCBS Examines Best Practices and Consults on Stress Testing Principles

Given the rapid evolution in stress testing practices, BCBS has reviewed its existing set of stress testing principles, which were published in May 2009, and published a consultation on the revised principles. The consultative document sets out a proposal to replace this set of principles with a new streamlined version. The proposed new version states the principles at a high enough level to be applicable across many banks and jurisdictions, also ensuring that they remain relevant as stress testing practices continue to develop. National authorities may wish to use the principles in designing their own stress testing rules, guidance, or frameworks. 

The range of practices report describes and compares supervisory and bank stress testing practices and highlights areas of evolution. The report finds that, in recent years, both banks and authorities have made significant advances in stress testing methodologies and infrastructure. The report draws primarily on the results of two surveys, respectively completed by Basel Committee member authorities and by banks. The bank survey was completed by 54 respondent banks from across 24 countries, including 20 global systemically important banks. The survey results are supplemented by case studies and other supervisory findings. A stress testing taxonomy is included with a common set of definitions for stress testing terms to aid the dialog between banks and supervisors.

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Comment Due Date: March 23, 2018

Keywords: International, Banking, Stress Testing, Stress Testing Principles, Stress Testing Taxonomy, BCBS