Finance and Banking

Scenario Analysis and Stress Testing of Banking Portfolios

A structured, applied course in scenario analysis and stress testing — designed to be used the week you return.

  • 5training days
  • 4modules
  • 8sessions
  • 32topics
View packages and pricesCourse outline
Scenario Analysis and Stress Testing of Banking Portfolios
5days

About the programme

Course Overview

In finance the difference between a healthy position on scenario analysis and stress testing and a dangerous one is often a single assumption. Regulators no longer accept intent as evidence of control over stress testing. They acquire practical criteria for judging when the wider financial and banking practice agenda is working and when it is only appearing to. Mature organisations treat scenario analysis and stress testing as a standing capability rather than a project that finishes. Participants come from operational and oversight roles, and both perspectives on this area of financial and banking practice are used deliberately. Content is organised around the decisions practitioners actually face in stress testing, not around theory headings. The method assumes participants will be challenged on their handling of scenario analysis and stress testing and prepares them for it. Ambition around stress testing outruns capacity unless the sequencing is deliberate. Participants finish with a short, specific brief on the practice within financial and banking practice ready to put in front of a decision maker.

Expected Learning Outcomes

  • Set the minimum documentation for scenario analysis and stress testing that is genuinely necessary, and stop there.

  • Design the reporting on stress testing that reaches decision makers in time to act.

  • Stress test scenario analysis and stress testing against scenarios that are plausible rather than comfortable.

  • Define the scope and boundaries of stress testing so that responsibility for it is unambiguous.

  • Review the contractual and legal exposure created by scenario analysis and stress testing.

  • Diagnose whether a problem in stress testing is one of design, resourcing or discipline.

  • Assess the capital and liquidity implications of scenario analysis and stress testing.

Who Should Attend

  • Members of committees that take decisions affecting scenario analysis and stress testing.

  • Risk managers responsible for stress testing.

  • Operations staff who encounter the consequences of scenario analysis and stress testing directly.

  • Internal auditors reviewing the controls around stress testing.

  • Finance managers reporting on scenario analysis and stress testing.

  • Regulatory reporting analysts covering stress testing.

Course Modules

Open any module to see its sessions and topics.

01

Scenario analysis and stress testing: exceptions, breaches and remediation

2 sessions · 8 points

Session 1The control on scenario analysis and stress testing that looks strong and is not

  • Confirm regulatory reporting on scenario analysis and stress testing is complete, timely and reconciled.
  • Confirm reporting on stress testing reaches the committee that can act on it.
  • Verify six months later that changes to scenario analysis and stress testing have held.
  • Assign responsibility for keeping documentation of stress testing current.

Session 2What a supervisor will ask about stress testing, and in what order

  • Build the competence framework that supports scenario analysis and stress testing.
  • Close out actions on stress testing rather than leaving them open indefinitely.
  • Check the legal and contractual exposure created by scenario analysis and stress testing.
  • List the assumptions in any model supporting stress testing and when each was last challenged.
02

Stress testing: pricing, profitability and risk-adjusted return

2 sessions · 8 points

Session 1Pricing stress testing for the risk actually taken

  • Reduce the variation in how scenario analysis and stress testing is carried out between teams.
  • Check that records of stress testing answer the questions likely to be asked.
  • Design the exception process for scenario analysis and stress testing and require a documented rationale.
  • Confirm client due diligence standards applied to stress testing are current.

Session 2Reporting stress testing so the reader can act on it

  • Identify the key controls over scenario analysis and stress testing and who tests them.
  • Distinguish symptoms from causes when stress testing underperforms.
  • Agree who signs off scenario analysis and stress testing and record that they did.
  • Write down the assumptions underpinning the approach to stress testing.
03

Stress testing: reporting that supports a decision

2 sessions · 8 points

Session 1Comparing stress testing with recognised practice

  • Name a single owner for each element of scenario analysis and stress testing.
  • Confirm segregation of duties across initiation, approval and settlement of stress testing.
  • Translate the appetite for scenario analysis and stress testing into limits someone monitors daily.
  • Document the remediation plan for each known weakness in stress testing.

Session 2The decisions in scenario analysis and stress testing that cannot be delegated

  • Rank the weaknesses in scenario analysis and stress testing by consequence rather than by ease of fixing.
  • Review whether stress testing is aligned with the objectives of the business line.
  • Prepare the evidence pack demonstrating scenario analysis and stress testing operated as designed.
  • Set early warning indicators for stress testing with defined action thresholds.
04

Stress testing: the control framework and segregation of duties

2 sessions · 8 points

Session 1The assumption inside the model for stress testing that nobody revisits

  • Compare the cost of scenario analysis and stress testing with the cost of its absence.
  • Record the rationale for each significant choice made about stress testing.
  • Confirm that reporting on scenario analysis and stress testing reaches the people who can act.
  • Check the accounting treatment applied to stress testing against current standards.

Session 2Closing out stress testing and capturing what was learned

  • Review the pricing of scenario analysis and stress testing against the risk being assumed.
  • Prepare the response for the most likely failure in stress testing.
  • Verify reconciliation and settlement controls covering scenario analysis and stress testing.
  • Set the review interval for stress testing and who attends.

Choose the package that suits you

Silver Package

At least 3 people

USD1,250
  • Workshop or Program Participation
  • Airport Transfers
  • Customized Badge
  • Expert Mentorship (Private Sessions)
  • Supervision & Secretarial Services
  • Accredited Certificate of Participation
  • Complete Training Kit
  • Coffee Break
  • Closing Ceremony

Gold Package

At least 3 people

USD1,850
  • 5-night stay in a 5-star hotel
  • Workshop or Program Participation
  • Airport Transfers
  • Customized Badge
  • Expert Mentorship (Private Sessions)
  • Supervision & Secretarial Services
  • Accredited Certificate of Participation
  • Complete Training Kit
  • Coffee Break
  • Closing Ceremony

Complete your registration

We will contact you within one business day to confirm.

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