Which of the following is an internal assessment tool that is used by the participating banks to ensure that they are prepared for the possibly damaging impact of ever changing market conditions?
A)Backtesting
B)Risk aggregation
C)Stress testing
D)Systemic testing
E)Damage testing

Question

Quizplus · Accepted Answer

Stress testing is an internal assessment tool that helps banks determine whether they are prepared for potential losses due to changes in market conditions. It involves subjecting a bank's portfolio to various scenarios to identify potential risks and prepare for adverse outcomes. Backtesting is a method of comparing a bank's actual performance against its expected performance, while risk aggregation involves combining multiple risks into a single view. Systemic testing and damage testing are not standard terms used in banking risk management.

Which of the Following Is an Internal Assessment Tool That