96. Institutions should use reverse stress testing as a tool to gather insights into scenarios that …

Institutions should use reverse stress testing as a tool to gather insights into scenarios that involve combinations of solvency and liquidity stresses, where traditional modelling may fail to capture complex aspects from real situations. Institutions should use reverse stress testing to challenge their capital plans and liquidity plans. Where appropriate, institutions should identify and analyse situations that could aggravate a liquidity stress event and transform it into a solvency stress event, and vice versa, and eventually to a business failure. Institutions should endeavour to apply reverse stress testing in an integrated manner for risks to capital or liquidity with a view to improving the understanding and the management of related risks in extreme situations.

Recovery actions and recovery planning

1. Overview

1.1 References

1.2 Identified Requirements

1.3 Related Standards

2. Identified Requirements

3. Related Standards

• EBA -

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