ALM Europe: "Stress testing must be overhauled"
The future of financial risk management will be determined by stress testing, but the methods used are in desperate need of an overhaul, delegates at the Risk ALM Europe conference in London heard today.
"Going forward, intelligent stress testing will be the key risk measure," predicted Dresdner's head of risk methodology, markets and trading, Markus Streck, echoing last week's news that the Basel Committee is working on overhauling its stress testing requirements.
But stress tests did not perform well in the recent past, cautioned Paul Sharma, the UK Financial Services Authority's director of
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