Running Additional Scenarios to Identify and Eliminate Potential Vulnerabilities Across the Institution

Article

Discover how leading institutions use advanced stress testing to uncover hidden vulnerabilities and enhance their risk management strategies. Continuous improvement, driven by a culture of innovation and peer collaboration, ensures that stress tests remain relevant and effective in addressing emerging risks.

Aug 12, 2024

Ceren Üstün, Head of Risk Management, Yapi Kredi Bank Deutschland

Running Additional Scenarios to Identify and Eliminate Potential Vulnerabilities Across the Institution

Institutions conduct quarterly stress tests using a traffic light system to identify vulnerabilities that traditional assessments might miss, leading to targeted mitigation strategies based on the severity of results.
Insights from stress tests influence the Bank’s risk appetite and limits, guiding decisions on capital, liquidity, and strategic planning to address identified vulnerabilities and improve resilience.
The risk management function continuously evolves through stakeholder involvement, workshops, and peer discussions, ensuring stress test scenarios adapt to new market conditions and regulatory requirements.
A culture of innovation and transparency supports the development of new stress test scenarios, enhancing the ability to proactively address emerging risks and maintain effective risk management practices.