Stress testing for financial services

The Federal Reserve conducts annual supervisory stress tests of US banks and US intermediate holding companies with $50 billion or more in total consolidated assets to determine whether a bank has the capital to sustain itself through future hypothetical stress scenarios. As firms continue to enhance stress testing capabilities and respond to regulatory feedback, it is imperative that firms align finance, risk and strategy to accomplish these goals. Firms must begin to view stress testing as an integral tool for risk and capital management and as a driver of core business insights, rather than simply a regulatory requirement.

How PwC can help

PwC has extensive knowledge and experience in design and execution across all components of risk management, capital planning, and stress testing projects. We have the capabilities to successfully support firms in preparing, executing, or enhancing each stage of the stress testing life cycle.

Scope of services

Overall

  • Governance and oversight
  • Review and challenge
  • Integration with strategy and financial planning
  • Capital planning and policy
  • Risk identification and scenario development
  • Model development and documentation
  • Aggregation, data management, and documentation
  • Automation and analytics

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Build capabilities

  • Assist clients in developing or enhancing core stress testing capabilities to meet regulatory expectations

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Reduce production cycle

  • Assist clients in reducing their production cycle through process redesign, technology enhancements, and automation, enabling increased efficiency, reduced costs and headcount, improved controls, and increased accuracy

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Develop integrated stress testing

  • Assist clients with integrating modeling capabilities, technology, data, and outputs across capital planning and stress testing
  • Assist clients with integrating modeling capabilities across strategy setting, financial planning, Recovery and Resolution planning, and other forms of capital and liquidity stress testing 

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Optimization and analytics

  • Assist clients with deriving strategic insights by integrating outputs of stress testing into day-to-day operations and business decision making – from top of house strategy and capital allocation to day-to-day decisions

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Contact us

Michael Alix
US Financial Services Advisory Risk Leader
Tel: +1 (646) 471 3724
Email

Doug Summa
Partner
Tel: +1 (646) 471 8596
Email

Steve Pearson
Partner
Tel: +1 (646) 471 0080
Email

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