Put to the test

Finansinspektionen became the first European regulator to publicly reveal the results of its stress tests on Sweden's four largest banks in June. But how much do such exercises reveal about the ability of the country's financial institutions to withstand serious stresses? Alastair Marsh reports

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