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Event Q&A
Regulatory scrutiny casts stress testing as banks' strategic compass
Financial institutions are rethinking stress testing as a strategic tool, using AI, smarter controls, and boundary awareness to unlock real value.
Sep 30, 2025
Ushnish Banerjee, EMEA QAG Vice President, Morgan Stanley
The views and opinions expressed in this content are those of the thought leader as an individual and are not attributed to CeFPro or any other organization
- Stress testing evolving from compliance task to strategic tool for capital planning risk appetite and resilience
- Bridges gap between IFRS9 CECL expected loss models and conservative Pillar1 with Pillar2 covering all risks
- Inefficiencies in scenario design data integration validation and reporting cause hidden conservatism
- Regulatory scrutiny and crises drive new modeling approaches as old calibrations show fragility
- AI ML aid in data quality anomaly detection and reverse stress testing but need human oversight
- Defining monitoring and communicating model operating boundaries prevents misuse and misinterpretation
- Excess conservatism weakens strategic value but integration with business planning is improving
- Strong governance advanced analytics and awareness of model limits make stress testing a shield and compass
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