CCAR Results: Taking the stress out of stress testing

Following the results of the Comprehensive Capital Analysis and Review (CCAR), it’s fair to say that risk and capital management have significantly evolved since the global financial crisis of 2008. The positive CCAR results confirm that financial institutions are showing true commitment in having robust, forward-looking capital planning processes that take into account environment and firm-specific risks in order to operate through stressful conditions. This is supported by the recent DTCC report that indicates that systemic risk protection is becoming firmly embedded in corporate culture and standard business practices[1].

However, it’s important to keep in mind that the job is far from done. The Senior Supervisors Group on Counterparty Data states that data quality is of particular concern. While aggregation and automation capabilities have improved, data errors have not diminished proportionally. “Data aggregation issues and breakdowns in controls and governance result in that many firms cannot measure and monitor the accuracy of the data or rectify data quality issues in a timely manner”[2].

A robust data infrastructure, embedded data management processes, and dedicated data and reporting teams, can help implement the workflows that will allow compliance and reporting to become more effective and efficient for financial institutions.

By working with an experienced specialist to automate some of the core processes involved within stress testing, organizations can be relieved of some of the time, capital and resources that go into ensuring compliance. Without this, inaccurate data can have an exponential effect on the results and the capital requirements of a bank.

Take the stress out of stress testing - by developing a data supply chain that gets the right quality data to the right place at the right time, banks can concentrate on adopting a holistic and forward-looking view across the organization.

[1] http://www.dtcc.com/en/news/2014/march/27/survey-systemic-risk.aspx

[2] https://www.financialstabilityboard.org/publications/r_140116.pdf