Put to the test

Stress-testing

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If the turmoil of the past two years has proved anything, it is that the reliance on quantitative risk management techniques by financial institutions has its limitations. As events unfolded, it became apparent the firms who performed best supplemented quantitative tools with a strong emphasis on qualitative measures, including stress-testing.

It is no wonder, then, that stress-testing has seen its stock soar with regulators lately, particularly in their assessments of capital adequacy at banks.

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