Scenario Analysis and Stress Testing for Community Banks: A Basic Guide

Hard copy version.

As a membership benefit, individual RMA members can enjoy free downloads of the ERM workbooks. A free hard copy of each workbook is also available. (One copy per institution. Please contact your Relationship Manager.)

It is available to Professional members for the list price.

Developing a holistic risk management strategy

How often have you wondered, “what else can go wrong and how are all the risks interconnected?” Developing a stress testing and scenario analysis program, as well as a risk appetite statement, can help you build an effective, proactive risk management strategy and enhance the risk culture of your institution.

The RMA Community Bank and Enterprise Risk Management Councils are pleased to debut the Scenario Analysis & Stress Testing Workbook for Community Banks. Developed for community banks with assets under $10 billion, this workbook provides a highly practical guide to understanding and developing a stress testing and scenario analysis program.

In this workbook, you will find:

• A guide to developing a stress testing and scenario analysis program
• How to choose the stress test that’s right for your institution
• The steps involved in creating a stress test
• The roles and responsibilities of key participants
• How to link the stress test to capital
• An outline to engage your board of directors and senior management

The benefits:

• Meet increased expectations of regulators.
• Shape the risk profile of the bank by allowing for the analysis of every day “what if ” events, as well as extreme events.
• Identify risk concentrations across various business lines and allow management to form contingency plans.
• Promote discussions about risk that lead to enhanced internal and external risk communication.
• Assist in identifying strategic opportunities.