FSA tightens stress testing requirements

Reverse stress testing will now feature alongside the current range of stress tests firms must carry out to identify and assess scenarios most likely to cause their business models to become unviable. Firms subject to the new reverse stress testing requirement will have 12 months to incorporate the process into their risk management strategy. The FSA's three-part stress test system involves the firm's own stress testing process, FSA stress testing of specific firms and simultaneous system-wide stress testing. Firms must develop and maintain an appropriate testing programme for capi...