35. Competent authorities should identify and select stress test scenarios based on the objectives …

Competent authorities should identify and select stress test scenarios based on the objectives of the exercise. They should consider the use of scenarios based on the most recent scientific knowledge and elaborated by widely recognised international or regional organisations⁸ They are also encouraged to leverage sectoral and regional trajectories to provide financial entities with an

7 Given the assumption needed on the scenario calibration and modelling issues, as a general principle, the longer the time horizon, the higher the reliance on more qualitative rather than quantitative information (e.g., no accurate recalculation of capital and solvency metric is expected on a long-term horizon). 8 E.g. for climate risks: the Intergovernmental Panel on Climate Change (IPCC), the Network for Greening the Financial System (NGFS), the International Energy Agency (IEA), the United Nations Environment Programme (UNEP), the Joint Research Center of the EU Commission (EU JRC) or national government or non-government bodies; 9 adequate breakdown of macroeconomic variables, while maintaining the overall internal consistency of the scenarios.

1. Overview

1.1 References

1.2 Identified Requirements

1.3 Related Standards

2. Identified Requirements

3. Related Standards

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