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QuIC Publishes Risk Industry Practices in Stress Testing White Paper

“Restoring Credibility – The Importance of Stress Testing” Validates Industry Demand for QuIC Stress Definition Language

QuIC Financial Technologies, a market leader providing the world’s financial organisations with risk management, pricing and analytic solutions, today announced a significant demand for their latest white paper on stress testing. QuIC commissioned the consultancy Lepus to research stress testing practices of 50 senior level representatives at major financial services institutions around the world, and the results were published in a white paper titled, Restoring Credibility – The Importance of Stress Testing.

The results of the white paper indicate that stress based risk management has emerged as a foremost priority for the financial services industry. Facing unprecedented levels of scrutiny and pending Financial Services Authority (FSA) regulatory reform, banks are heavily focused on implementing a more robust and comprehensive risk infrastructure to facilitate timely and meaningful results from stress testing. A clear majority of respondents (70 percent) stated they are currently making attempts to view and stress risks in a more holistic manner, while placing an increased technological focus on their risk management strategies.

“There’s no question that stress testing is a hot topic right now,” stated Justin Forrest, Executive Vice President of Global Sales for QuIC. “Institutions need to overcome significant challenges of integrating various types of risk which involve immense volumes of data, across varying portfolios and business divisions with multiple data sources. In line with the findings, even banks that have some form of working solution are looking to new technology to enhance or improve their current systems.”

The study also revealed that financial institutions are updating priorities and approaches to stress testing. Over 80 percent of those surveyed are introducing more severe scenarios while 55 percent are performing scenarios with higher frequency to meet pending FSA requirements. The total number of institutions that now facilitate daily stress testing has increased by 50% since the recent crisis, with the greatest increases seen in market and liquidity risk.

Another key finding of the white paper showed banks are placing greater emphasis on improving intelligence derived from risk technology and infrastructure, with over 50 percent increasing the granularity of test data and 44 percent improving the dissemination of results as a key driver of successful stress testing. These results highlight growing industry demand for risk technology that offer higher calculation speed and accuracy to drive regulatory approval while providing the right reporting and analysis to enhance a bank’s overall competitive advantage.

“Stress testing approaches and regulatory requirements are going to keep evolving and institutions require technology that is scalable and customisable to stay ahead of the curve,” added Forrest. “This study validates the need for QuIC solutions that can provide decision makers with the speed and modelling flexibility to produce actionable information that provides a holistic view across the entire organisation.”