Stress Testing
/ˈstrɛs ˌtɛstɪŋ/
Definitions
- (n.) A risk assessment method to evaluate the resilience of financial institutions or systems under adverse conditions.
The bank performed stress testing to ensure it could withstand economic downturns.
- (n.) A process used in regulatory compliance to analyze the impact of hypothetical scenarios on capital adequacy.
Regulators require stress testing to verify that the firm meets minimum capital requirements under stress.
Forms
- stress testing
Related terms
See also
Commentary
Stress testing in law primarily arises in financial regulation contexts, focusing on compliance and risk exposure; precise scenario selection is crucial for meaningful results.
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.