Principles for sound stress testing practices and supervision
This document assesses stress testing practices during the crisis. Based on that assessment and in an effort to improve practices, it develops sound principles for banks and supervisors. The principles cover the overall objectives, governance, design and implementation of stress testing programmes as well as issues related to stress testing of individual risks and products. The recommendations are aimed at deepening and strengthening banks' stress testing practices and supervisory assessment of these practices. By itself, stress testing cannot address all risk management weaknesses, but as part of a comprehensive approach, it has a leading role to play in strengthening bank corporate governance and the resilience of individual banks and the financial system.