Credibility and Crisis Stress Testing
Credibility and Crisis Stress Testing

Author: Ms.Li L. Ong

Publisher: International Monetary Fund

Published: 2013-08-09

Total Pages: 64

ISBN-13: 1475527063

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Credibility is the bedrock of any crisis stress test. The use of stress tests to manage systemic risk was introduced by the U.S. authorities in 2009 in the form of the Supervisory Capital Assessment Program. Since then, supervisory authorities in other jurisdictions have also conducted similar exercises. In some of those cases, the design and implementation of certainelements of the framework have been criticized for their lack of credibility. This paper proposes a set of guidelines for constructing an effective crisis stress test. It combines financial markets impact studies of previous exercises with relevant case study information gleaned from those experiences to identify the key elements and to formulate their appropriate design. Pertinent concepts, issues and nuances particular to crisis stress testing are also discussed. The findings may be useful for country authorities seeking to include stress tests in their crisis management arsenal, as well as for the design of crisis programs.

Stress Testing at the IMF
Stress Testing at the IMF

Author: Mr.Tobias Adrian

Publisher: International Monetary Fund

Published: 2020-02-05

Total Pages: 73

ISBN-13: 1513520741

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This paper explains specifics of stress testing at the IMF. After a brief section on the evolution of stress tests at the IMF, the paper presents the key steps of an IMF staff stress test. They are followed by a discussion on how IMF staff uses stress tests results for policy advice. The paper concludes by identifying remaining challenges to make stress tests more useful for the monitoring of financial stability and an overview of IMF staff work program in that direction. Stress tests help assess the resilience of financial systems in IMF member countries and underpin policy advice to preserve or restore financial stability. This assessment and advice are mainly provided through the Financial Sector Assessment Program (FSAP). IMF staff also provide technical assistance in stress testing to many its member countries. An IMF macroprudential stress test is a methodology to assess financial vulnerabilities that can trigger systemic risk and the need of systemwide mitigating measures. The definition of systemic risk as used by the IMF is relevant to understanding the role of its stress tests as tools for financial surveillance and the IMF’s current work program. IMF stress tests primarily apply to depository intermediaries, and, systemically important banks.

Macroprudential Solvency Stress Testing of the Insurance Sector
Macroprudential Solvency Stress Testing of the Insurance Sector

Author: Mr.Andreas A. Jobst

Publisher: International Monetary Fund

Published: 2014-07-22

Total Pages: 84

ISBN-13: 149832455X

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Over the last decade, stress testing has become a central aspect of the Fund’s bilateral and multilateral surveillance work. Recently, more emphasis has also been placed on the role of insurance for financial stability analysis. This paper reviews the current state of system-wide solvency stress tests for insurance based on a comparative review of national practices and the experiences from Fund’s FSAP program with the aim of providing practical guidelines for the coherent and consistent implementation of such exercises. The paper also offers recommendations on improving the current insurance stress testing approaches and presentation of results.

Credibility and Crisis Stress Testing
Credibility and Crisis Stress Testing

Author: Ms.Li L. Ong

Publisher: International Monetary Fund

Published: 2013-08-09

Total Pages: 64

ISBN-13: 1484395611

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Credibility is the bedrock of any crisis stress test. The use of stress tests to manage systemic risk was introduced by the U.S. authorities in 2009 in the form of the Supervisory Capital Assessment Program. Since then, supervisory authorities in other jurisdictions have also conducted similar exercises. In some of those cases, the design and implementation of certainelements of the framework have been criticized for their lack of credibility. This paper proposes a set of guidelines for constructing an effective crisis stress test. It combines financial markets impact studies of previous exercises with relevant case study information gleaned from those experiences to identify the key elements and to formulate their appropriate design. Pertinent concepts, issues and nuances particular to crisis stress testing are also discussed. The findings may be useful for country authorities seeking to include stress tests in their crisis management arsenal, as well as for the design of crisis programs.

Preparing for the Next Financial Crisis
Preparing for the Next Financial Crisis

Author: Esa Jokivuolle

Publisher: Cambridge University Press

Published: 2017-11-16

Total Pages: 205

ISBN-13: 1107185599

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This book uses perspectives of finance and banking to offer predictions on future financial crises, and how we can prepare for them.

The Stress Test Every Business Needs
The Stress Test Every Business Needs

Author: Jeffrey R. Greene

Publisher: John Wiley & Sons

Published: 2018-09-05

Total Pages: 276

ISBN-13: 1119417945

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Future-proof your business today for stronger performance tomorrow The Stress Test Every Business Needs: A Capital Agenda for Confidently Facing Digital Disruption, Difficult Investors, Recessions and Geopolitical Threats provides a comprehensive approach to creating value and flexibility in an increasingly volatile business environment that presents both great risks and opportunities every day. The authors extend the banking “stress test” concept to a company’s Capital Agenda — how executives manage capital, execute transactions and apply corporate finance tools to strategic and operational decisions. Having a static Capital Agenda, however appropriate for your current market position, is not enough in today's uncertain world. Long-term success comes from building resilience into each element and in the way those elements interact. The book uses a broader definition of business stress that includes traditional macroeconomic and geopolitical risks, as well as technological disruption, hostile takeovers and activist shareholders. Companies that make poor strategic decisions or underperform operationally will likely find themselves facing great stress. And that stress is symmetric; threats come from downside risks and from missed opportunities. The chapters address the how and why of essential issues such as: Formulating corporate strategy in a digital world Pre-empting activist shareholders Restoring distressed companies to operational and financial health Ensuring effective collaboration among strategy, finance and operations Getting the most out of your advisors Proactively managing intrinsic value Rigorously allocating capital across the enterprise Acquiring and divesting for optimum value Syncing financing decisions with business strategy and capital market conditions Incorporating tax planning throughout the Capital Agenda Liberating excess cash with leading working capital management practices Aligning strategic goals and metrics to reach your company’s full potential Companies that develop strategy and set operational priorities with a balanced Capital Agenda are best positioned to control their own destiny. The Stress Test Every Business Needs provides a roadmap to future-proof your business today for stronger performance tomorrow.

Managing Systemic Banking Crises
Managing Systemic Banking Crises

Author: Ms.Marina Moretti

Publisher: International Monetary Fund

Published: 2020-02-11

Total Pages: 88

ISBN-13: 1513512277

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This paper updates the IMF’s work on general principles, strategies, and techniques from an operational perspective in preparing for and managing systemic banking crises in light of the experiences and challenges faced during and since the global financial crisis. It summarizes IMF advice concerning these areas from staff of the IMF Monetary and Capital Markets Department (MCM), drawing on Executive Board Papers, IMF staff publications, and country documents (including program documents and technical assistance reports). Unless stated otherwise, the guidance is generally applicable across the IMF membership.

A Framework for Macroprudential Bank Solvency Stress Testing
A Framework for Macroprudential Bank Solvency Stress Testing

Author: Mr.Andreas A. Jobst

Publisher: International Monetary Fund

Published: 2013-03-13

Total Pages: 55

ISBN-13: 1475573928

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The global financial crisis has placed the spotlight squarely on bank stress tests. Stress tests conducted in the lead-up to the crisis, including those by IMF staff, were not always able to identify the right risks and vulnerabilities. Since then, IMF staff has developed more robust stress testing methods and models and adopted a more coherent and consistent approach. This paper articulates the solvency stress testing framework that is being applied in the IMF’s surveillance of member countries’ banking systems, and discusses examples of its actual implementation in FSAPs to 18 countries which are in the group comprising the 25 most systemically important financial systems (“S-25”) plus other G-20 countries. In doing so, the paper also offers useful guidance for readers seeking to develop their own stress testing frameworks and country authorities preparing for FSAPs. A detailed Stress Test Matrix (STeM) comparing the stress test parameters applie in each of these major country FSAPs is provided, together with our stress test output templates.

Expected Credit Loss Modeling from a Top-Down Stress Testing Perspective
Expected Credit Loss Modeling from a Top-Down Stress Testing Perspective

Author: Mr.Marco Gross

Publisher: International Monetary Fund

Published: 2020-07-03

Total Pages: 47

ISBN-13: 1513549081

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The objective of this paper is to present an integrated tool suite for IFRS 9- and CECL-compatible estimation in top-down solvency stress tests. The tool suite serves as an illustration for institutions wishing to include accounting-based approaches for credit risk modeling in top-down stress tests.

Governing the Pandemic
Governing the Pandemic

Author: Arjen Boin

Publisher: Palgrave Pivot

Published: 2021-05-11

Total Pages: 130

ISBN-13: 9783030726799

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This open access book offers unique insights into how governments and governing systems, particularly in advanced economies, have responded to the immense challenges of managing the coronavirus pandemic and the ensuing disease COVID-19. Written by three eminent scholars in the field of the politics and policy of crisis management, it offers a unique ‘bird’s eye’ view of the immense logistical and political challenges of addressing a worst-case scenario that would prove the ultimate stress test for societies, governments, governing institutions and political leaders. It examines how governments and governing systems have (i) made sense of emerging transboundary threats that have spilled across health, economic, political and social systems (ii) mobilised systems of governance and often fearful and sceptical citizens (iii) crafted narratives amid high uncertainty about the virus and its impact and (iv) are working towards closure and a return to ‘normal’ when things can never quite be the same again. The book also offers the building blocks of pathways to future resilience. Succeeding and failing in all these realms is tied in with governance structures, experts, trust, leadership capabilities and political ideologies. The book appeals to anyone seeking to understand ‘what’s going on?’, but particularly academics and students across multiple disciplines, journalists, public officials, politicians, non-governmental organisations and citizen groups.