Solution Brief
Stress Testing and Scenario Analysis
Banks that can modernize their stress test processes to facilitate strategic business planning will be at a competitive advantage
The issue
Supervisory stress testing has strengthened the financial system and has greatly improved the risk management capabilities of institutions, but the ongoing burden of running these periodic tests remains a challenge.
Leading banks recognize the strategic value of enterprise-level, scenario-based planning, but resource constraints and process inefficiencies often limit the utility of their stress test programs beyond regulatory compliance. Banks that can modernize their stress test processes to facilitate strategic business planning will be at a competitive advantage compared with banks that continue their inefficient, legacy approaches.
Even with stress testing in place domestically and globally, one bank failure sends contagion shockwaves throughout the entire global sector. The determining factors of bad bank management, systemic failure, or the unknown rapidly increase. In 2023, the domino effects of a few bank failures in the US, coupled with the failure of a major European bank, reinforced the need to strengthen the stress testing framework. These bank failures also emphasized the need for more robust, comprehensive, and frequent evaluations to safeguard financial stability.
The challenge
Uncertain and ever-changing outlooks
Management needs timely analyses to inform decision making. SAS allows you to quickly analyze outcomes across diverse scenarios.
Slow and inflexible processess
While periodic supervisory tests can be well-planned and orchestrated, strategic response requires nimbleness. SAS reduces cycle times so you can quickly iterate multiple scenarios and assumptions. Customizable reporting facilitates ad hoc analyses to address pressing concerns.
A small pool of qualified talent
Scenario analysis and stress testing require a blend of analytical skills and business acumen. Additionally, industry competition makes recruitment and retention difficult. SAS provides a highly automated, UI-driven process that reduces key person risks.
Maintenance of controls and transparency
A dynamic, iterative environment heightens operational risks. Our structured, transparent workflow maintains systematic controls and auditability for strong governance.
(Drill down into data.; Prioritize risk remediation efforts.; Assess emerging risks.)
Our approach
Banks need a readily accessible working environment to analyze their performance quickly over a wide range of scenarios. We approach the problem by providing software and services to help you manage your portfolio with:
Rapid access to powerful risk analytics
SAS provides a cloud-based, open environment for scenario-based stress testing. Quickly begin analyzing your portfolio over a wide range of economic scenarios and business assumptions.
Synchronized process orchestration
SAS helps you optimize workstreams and facilitate collaboration. Ensure your entire team is using a consistent set of scenarios and assumptions. Maintain strong governance and controls.
Powerful model implementation and execution environment
Use prebuilt models or import your own. Rapidly perform simulations and automatically process results. Add overlays and adjustments with full transparency.
Flexible data visualization and reporting
Take advantage of the included capital and financial measures. Generate income statement and balance sheet projections. Easily drill into results to identify key drivers and understand their impacts.
Attribution and trend analysis
Quantify the effects of changing scenarios and assumptions. Estimate impacts of potential strategies.
SAS difference
SAS helps financial institutions of all sizes address their most challenging issues in risk and financial management. Our global experience, combined with our leading-edge data and AI platform, provides a scenario-based stress test solution that offers:
Cloud-based convenience
- A quick and easy-to-implement environment covers the entire process, including data collection, scenario management, model execution and reporting.
Proven high-performance analytics
- Financial institutions across the globe rely on SAS for critical risk and finance functions. Our industry-leading data and AI platform enables you to address business challenges with improved efficiency and effectiveness.
Flexibility and scalability to meet evolving requirements
- Highly automated, dashboard-driven capabilities support more expansive value-add across your organization.
Technical and subject-matter expertise
- SAS offers global technical and domain-level support services to ensure your immediate and ongoing success.
#2
In 2024, SAS ranked No. 2 overall in the Chartis RiskTech 100
In 2024, SAS ranked No. 2 overall in the Chartis RiskTech 100 and was the category winner in:
- Artificial Intelligence for Banking
- Balance Sheet Risk Management
- Behavioral Modeling
- Enterprise Stress Testing
- IFRS 9
- Model Risk Management
- Risk and Finance Integration