Stress Testing Frameworks

Stress testing frameworks are structured methods used by organizations, especially financial institutions, to assess how their systems, processes, and financial health would perform under extreme or adverse conditions. They simulate scenarios like economic downturns, market crashes, or unexpected failures to identify vulnerabilities and ensure preparedness. These frameworks involve setting specific stress scenarios, running simulations, analyzing results, and implementing improvements. By doing so, organizations can strengthen resilience, maintain stability, and meet regulatory requirements, ultimately protecting stakeholders and the broader economy from potential shocks.