Stress testing next focus for Basel

With the need for more qualitative assessments of risk becoming ever more important in the wake of the credit crisis, the Basel Committee on Banking Supervision is working on a consultation paper on stress testing.

Great strides have been made in the quantification of risk in the past decade, in no small part due to regulatory requirements under the Basel II framework. Even so, recent turmoil has highlighted several shortcomings in the ability of models to capture all risks, particularly during