Skip to main content
U.S. flag
An official website of the United States government
Dot gov
The .gov means it’s official. 
Federal government websites often end in .gov or .mil. Before sharing sensitive information, make sure you’re on a federal government site.
Https
The site is secure. 
The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely.
INACTIVE
This page is no longer active. Its content has expired or been rescinded by the FDIC.
Financial Institution Letter

Guidance Proposed Guidance on Stress Testing for Banking Organizations with More Than $10 Billion in Total Consolidated Assets

June 16, 2011
Notes
 
Summary: The federal banking regulatory agencies have jointly issued the attached proposed guidance on stress testing for banking organizations with more than $10 billion in total consolidated assets. The proposed guidance highlights the importance of stress testing as an ongoing risk management practice that supports a banking organization’s forward-looking assessment of its risks.

Statement of Applicability to Institutions under $1 Billion: The proposed guidance does not apply to institutions with total assets under $1 billion.

Highlights:

The proposed guidance:

  • Applies to banking organizations with consolidated total assets equal to or greater than $10 billion.
  • Highlights four principles that should be part of a banking organization’s stress testing framework. The framework should (1) include activities and exercises that are tailored to the activities of the organization; (2) employ multiple conceptually sound activities and approaches; (3) be forward-looking and flexible; and (4) be clear, actionable, well-supported, and used in the decision-making process.
  • Emphasizes the importance of stress testing as a tool for assessing risk and addressing a range of potential adverse outcomes.
  • Discusses four types of stress tests: scenario analysis; sensitivity analysis; enterprise-wide stress testing; and reverse stress testing.
  • Notes that stress testing should be commensurate with an organization’s size, complexity, and business profile.
  • Discusses the importance of stress testing in capital and liquidity planning.

Distribution:
FDIC-Supervised Banks (Commercial and Savings)

Suggested Routing:
Chief Executive Officer
Chief Financial Officer
Chief Risk Officer

Note:
FDIC financial institution letters (FILs) may be accessed from the FDIC's Web site at www.fdic.gov/news/financial-institution-letters/2011/index.html

To receive FILs electronically, please visit http://www.fdic.gov/about/subscriptions/index.html

Paper copies of FDIC financial institution letters may be obtained through the FDIC's Public Information Center, 3501 Fairfax Drive, E-1002, Arlington, VA 22226 (1-877-275-3342 or 703-562-2200).

Additional Related Topics:

  • Risk-Based Capital Rules
  • 12 CFR Part 325
  • Basel II
  • Market Risk
FIL-47-2011
Attachment(s)

Last Updated: June 16, 2011