Credit Stress-Testing Solution

A forward-looking approach to credit risk management and capital planning.

Understanding how future stressful economic events could impact credit losses and capital is quickly becoming an important facet of enterprise risk management and capital planning.

Since the introduction of mandated credit stress testing at the largest banks and credit unions, there has been a progressive migration toward the mid-tier/smaller community banking and credit union space.

“The top down portfolio level Credit Stress Test has been a great addition to our own internal credit stress reviews. We utilize the Credit Stress Test information in our capital planning, stress testing and ERM processes.  Simulating the equivalent of significant recession scenarios with forward looking loss curves has given our directors and regulators a greater level of comfort with our current loan concentrations and overall capital adequacy.”
Joe Turner, CEO
Rex Copeland, CFO
Great Southern Bank
Springfield, MO

Credit Stress-Testing Solution for Community Banks

Credit Stress-Testing Solution for Credit Unions

As a result, the request for a more formalized approach to credit stress testing for community banks and credit unions is now being discussed more frequently at many regulatory exams.

While initially motivated by regulatory compliance concerns, a growing number of financial institutions of all sizes are recognizing the benefits of credit stress testing in the context of overall capital and strategic planning.

Read DCG Managing Director Vinny Clevenger interviewed in FMS Update article entitled Compression Plan here.