The Case for Stress Testing at Community Banks

by Sabrina I. Pacifici on November 15, 2010

Conference of State Bank Supervisors: The Case for Stress Testing at Community Banks – Enhancing the risk management framework to ensure economic viability, October 2010 – “The following paper is intended to provoke a policy discussion on the value of stress testing for community banks. The paper is issued based on the following policy statement approved by the CSBS Regulatory Committee:

  • While banks with assets greater than 10 billion are required to conduct stress testing under the Dodd‐Frank Act, community banks should also consider utilizing stress testing as a part of their risk management framework. Stress testing implementation should:

    1. Be an industry driven solution;

    2. Be designed to meet the risk management needs of the bank; and
    3. Not be a regulatory exercise”

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