Supervisor Stress Testing

Supervisor Stress Testing is a process used by regulatory authorities to evaluate how well financial institutions can handle economic challenges or crises. By simulating adverse conditions, such as a recession or financial market turmoil, supervisors assess whether banks have enough capital and risk management practices in place to remain stable and protect customers. This testing helps ensure that banks can survive tough times, safeguarding the broader economy and maintaining public confidence in the financial system. Overall, it's a proactive measure to identify vulnerabilities and promote resilience in the financial sector.