Financial Stress Testing
/ˈfaɪnænʃəl ˈstrɛs ˈtɛstɪŋ/
Definitions
- (n.) A regulatory and risk management process that assesses a financial institution's resilience against adverse economic scenarios.
The bank completed financial stress testing to ensure it could withstand a severe market downturn.
- (n.) A mandated evaluation by financial regulatory authorities to determine the capital adequacy of banks under hypothetical stress conditions.
Financial stress testing is required by regulators to prevent systemic failures in the banking sector.
Forms
- financial stress testing
Related terms
See also
Commentary
Financial stress testing is primarily a noun phrase used in regulatory and compliance contexts; it involves scenario simulations rather than isolated financial audits.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.