STRESS TESTING

Effective risk management requires more than understanding current risk exposures. It also involves assessing their potential consequences under adverse conditions.

Stress testing is one of the essential tools of modern risk management, capital and liquidity planning, and strategic decision-making in banks.

By developing and applying relevant stress scenarios, banks can assess how changes in economic, market, and business conditions could affect their capital adequacy, liquidity, profitability, and overall financial resilience.

The value of stress testing goes beyond quantifying potential losses. It enables banks to identify vulnerabilities at an early stage, understand risk interdependencies, and prepare appropriate management responses.

RISKA provides specialized advisory and training services to banks in developing, conducting, assessing, and enhancing stress-testing frameworks.

How Can We Support Your Bank?

| Development and Enhancement of Stress-Testing Methodologies

Professional support in developing and reviewing stress-testing methodologies, including:

• Identification of relevant risks and risk factors.

• Definition of time horizons and key assumptions.

• Development of approaches for quantifying financial impacts.

• Selection of appropriate methods and models.

• Documentation of methodologies and results.

| Stress Scenario Development

Design and analysis of relevant stress scenarios reflecting the bank’s business model, risk exposures, and changes in the external environment.

Particular attention is given to understanding risk interdependencies and their potential cumulative effects.

| Individual Risk and Bank-Wide Stress Testing

Development and execution of stress tests for individual risk categories, as well as assessment of their aggregate impact on the bank’s financial position.

| Assessment of Capital, Liquidity, and Profitability Impacts

Analysis of the potential effects of adverse scenarios on:

• Capital adequacy and available capital.

• Liquidity positions and funding sources.

• Profitability and financial performance.

• The bank’s ability to maintain operations under stressed conditions.

| Integration of Stress Testing into ICAAP and ILAAP

Connecting stress scenarios and their results with the Internal Capital Adequacy Assessment Process (ICAAP) and the Internal Liquidity Adequacy Assessment Process (ILAAP).

Special emphasis is placed on using stress-testing results in capital and liquidity planning, defining risk appetite, and supporting strategic decision-making.

| Integration with Bank Recovery Planning

Support in developing reverse stress testing and assessing circumstances that could seriously threaten the viability of a bank’s business model.

The results of these analyses can provide valuable input for enhancing the Bank Recovery Plan and evaluating the effectiveness of available recovery options.

| Assessment of Existing Stress-Testing Frameworks

Independent professional assessment of existing methodologies, scenarios, assumptions, reports, and processes for managing stress-testing results.

Based on the assessment, we provide recommendations for improvement in line with relevant regulatory requirements and good practices.

| Training and Development of Internal Competencies

Practical training and professional support for employees in risk management, finance, Asset and Liability Management (ALM), and internal audit functions.

The objective is to strengthen methodological understanding, improve the interpretation of results, and support their application in everyday risk management.

Why Does Effective Stress Testing Matter?

A well-developed stress-testing framework contributes to:

• Early identification of potential business model vulnerabilities.

• Better understanding of risk interdependencies and concentrations.

• More effective capital and liquidity planning.

• Improved assessment of adverse economic and market conditions.

• Stronger regulatory compliance and supervisory reporting.

• Better data-driven management decisions.

• Greater long-term financial resilience.

Stress testing delivers its greatest value when its results become an integral part of management decisions rather than merely regulatory reports.

RISKA Professional Training: Stress Testing

Understanding Methodologies. Interpreting Results. Practical Application.

In addition to advisory services, RISKA develops and delivers professional stress-testing training programs tailored to the needs of banks and their employees.

Our programs combine supervisory expectations, methodological approaches, and practical examples from banking operations.

Key Training Areas

• Regulatory and supervisory frameworks for stress testing.

• Identification of key risk factors and development of stress scenarios.

• Methodologies for quantifying impacts on capital, liquidity, and profitability.

• Stress testing within ICAAP and ILAAP.

• Reverse stress testing and its relationship with Bank Recovery Planning.

• Interpretation of results and preparation of management reports.

• Integration of stress-testing results into strategic planning.

Who Are Our Services and Training Programs Designed For?

RISKA supports banks and financial institutions, particularly:

• Risk management professionals and managers.

• Finance, Treasury, and ALM teams.

• Capital and liquidity planning specialists.

• Model development and validation professionals.

• Internal audit and other control functions.

• Senior management and governing bodies responsible for risk oversight and financial resilience.

Advisory and Training Solutions Tailored to Your Institution

Every bank has its own business model, risk profile, data availability, and organizational capabilities.

That is why RISKA approaches stress testing through customized advisory solutions and practical training, tailored to each client’s needs and regulatory environment.

Our support may include:

• Development and enhancement of stress-testing methodologies.

• Assessment of existing frameworks and processes.

• In-house training and practical workshops.

• Advisory support in interpreting results and improving reporting.

Prepare for Risks Before They Become Reality

Effective stress testing helps banks transform uncertainty into valuable insights for planning, risk management, and decision-making.

RISKA supports the development and enhancement of stress-testing approaches that are not only aligned with regulatory requirements but also practical and effective.

Contact us to discuss advisory services or professional training tailored to your bank’s needs.

contact@riska.ba