Featured Product

    CBK Implements Advanced Stress Testing Framework for Banks

    December 29, 2020

    The Governor of CBK announced the development of a new framework for stress testing the banking system. The CBK Governor Dr. Mohammad Y. Al-Hashel said that the newly developed framework represents a holistic, highly flexible, and dynamic stress-testing approach that allows the incorporation of varied scenarios with a multitude of micro- and macro-economic and financial variables with capabilities to reflect the impact in granular detail on different sectors. CBK will start applying the new stress-testing framework on the current year’s data and announce the results thereof in the first quarter of 2021.

    The Governor emphasized that CBK has been working on developing stress-testing frameworks and models since the COVID-19 outbreak. These frameworks, built in collaboration with an international consultant, match the increasingly complex and highly uncertain economic environment by utilizing advanced technology, analysis of a multitude of economic and banking variables, and input by global experts to ensure the ability of the newly developed framework to produce forward-looking outputs in line with the defined scenarios. To ensure its efficacy, the new framework was back-tested using 2019 data. The results proved the framework’s effectiveness and capability in translating the varied stress-testing scenarios with consistent outputs. 

    The Governor concluded his statement by indicating that the new stress-testing framework represents the completion of the first phase of a broader project, with the following phase now in-development. In the upcoming phase, the project will use machine learning and artificial intelligence to enhance output quality, improve the ability to analyze different drivers and capabilities, and capture evolving economic drivers and trends. This will instill a deeper understanding that will evolve alongside the economic landscape and banking sector and, hence, ensure the quality of the stress-testing exercises. 

     

    Related LinkPress Release

     

    Keywords: Middle East and Africa, Kuwait, Banking, Stress Testing, COVID-19, Basel, CBK

    Featured Experts
    Related Articles
    News

    EBA Clarifies Use of COVID-19-Impacted Data for IRB Credit Risk Models

    The European Banking Authority (EBA) published four draft principles to support supervisory efforts in assessing the representativeness of COVID-19-impacted data for banks using the internal ratings based (IRB) credit risk models.

    June 21, 2022 WebPage Regulatory News
    News

    EP Reaches Agreement on Corporate Sustainability Reporting Directive

    The European Council and the European Parliament (EP) reached a provisional political agreement on the Corporate Sustainability Reporting Directive (CSRD).

    June 21, 2022 WebPage Regulatory News
    News

    PRA Consults on Model Risk Management Principles for Banks

    The Prudential Regulation Authority (PRA) launched a consultation (CP6/22) that sets out proposal for a new Supervisory Statement on expectations for management of model risk by banks.

    June 21, 2022 WebPage Regulatory News
    News

    EC Regulation Amends Standards for Calculating Credit Risk Adjustments

    The European Commission (EC) published the Delegated Regulation 2022/954, which amends regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.

    June 21, 2022 WebPage Regulatory News
    News

    HKMA Announces Launch of Data Repository on Sustainable Finance

    The Hong Kong Monetary Authority (HKMA) announced that the Green and Sustainable Finance (GSF) Cross-Agency Steering Group has launched the information and data repositories and outlined the progress made in advancing the development of green and sustainable finance in Hong Kong.

    June 21, 2022 WebPage Regulatory News
    News

    BIS Hub Updates Work Program for 2022, Announces New Projects

    The Bank for International Settlements (BIS) Innovation Hub updated its work program, announcing a set of projects across various centers.

    June 17, 2022 WebPage Regulatory News
    News

    EIOPA Issues Cyber Underwriting Proposal, Statement on Open Insurance

    The European Insurance and Occupational Pensions Authority (EIOPA) published two consultation papers—one on the supervisory statement on exclusions related to systemic events and the other on the supervisory statement on the management of non-affirmative cyber exposures.

    June 17, 2022 WebPage Regulatory News
    News

    NGFS Report on Integration of G-Cubed Model into NGFS Scenarios

    The Network for Greening the Financial System (NGFS) published a report that explores the feasibility of integrating the G-Cubed general equilibrium model into the NGFS suite of models.

    June 17, 2022 WebPage Regulatory News
    News

    US Senate Members Seek Details on SEC Proposed Climate Disclosure Rule

    Certain members of the U.S. Senate Committee on Banking, Housing, and Urban Affairs issued a letter to the Securities and Exchange Commission (SEC)

    June 16, 2022 WebPage Regulatory News
    News

    EIOPA Consults on Review of Securitization Framework in Solvency II

    The European Insurance and Occupational Pensions Authority (EIOPA) published a consultation paper on the advice on the review of the securitization prudential framework in Solvency II.

    June 16, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8301