"The Office of the Comptroller of the Currency today provided guidance to national banks and federal savings associations with assets of $10 billion or less (community banks) on using stress testing to assess risk in their loan portfolios. The guidance is contained in OCC Bulletin 2012-33, Community Bank Stress Testing: Supervisory Guidance. The OCC’s guidance provides additional clarity around stress testing expectations for community banks. The guidance also provides an example of a simple stress test framework to consider. The OCC expects all banks to have the capacity to analyze the potential impact of adverse outcomes on their financial condition in order to establish and support their risk appetite and tolerances, set concentration limits, adjust strategies, and appropriately plan for and maintain adequate capital levels. The guidance makes the point that stress tests do not need to involve sophisticated analysis or third-party consultative support. Effective methods can range from a single spreadsheet analysis to a more sophisticated model, depending on portfolio risk and the complexity of the bank."