Summary

RISE hosted a virtual roundtable to discuss the challenges faced by financial institutions in their stress testing processes and the potential to solve them using a common industry solution. The session was attended by 78 senior stress testing professionals from 32 institutions of various regions and sizes.

Participants discussed common themes such as the need for automation of existing processes and accelerated design of internal scenarios for stress testing.

RISE discussed the value proposition of its Scenario Expansion Manager (SEM) Platform, which was built using design input from Tier 1 global banks. This ensured the solution would be fit for purpose across multiple supervisory jurisdictions. The SEM Platform supports accelerated expansion of scenarios through the use of a suite of in-built analytical models, model validation tests and seamless workflow approval processes with automated logs for audit purposes. RISE provided a brief walkthrough of the platform, demonstrating a use case incorporating the new Fed scenarios (DFAST Round 2), which had been uploaded onto the platform within a couple of days of their release, and answered questions about the platform’s value-adding features.

Many of the attenders felt the platform’s analytical models and automated workflow management processes will deliver significant cost and time efficiencies to their institutions. Some of the institutions who have already started using the platform shared specific views on how they have benefited from both the analytical models and the streamlined workflow processes.

RISE also discussed the proposition of financial institutions leveraging the ecosystem to share internal scenarios with each other, in an anonymised manner, through the SEM Platform. The vast majority of participants indicated this would add value through acceleration of their internal scenario design and benchmarking of existing scenarios.

With ongoing inputs from financial institutions, RISE continues to enhance the SEM Platform to meet the evolving stress testing needs of the industry. Climate Risk scenarios are an example of an area for incorporation into the platform.

Presented below are the results of a couple of spot poll questions answered by the participants during the roundtable.