51. Any management actions recognised by financial entities should be assessed based on their …

Any management actions recognised by financial entities should be assessed based on their feasibility, timeliness, and potential unintended consequences, avoiding excessive reliance on optimistic assumptions. Competent authorities should ensure that a dynamic balance sheet approach with constraints enhances the realism and forward-looking nature of ESG stress tests through incorporating credible plans and managerial responses, while maintaining minimum safeguards against excessive flexibility in assumptions and enhancing comparability in stress test results.

Sample of financial entities

1. Overview

1.1 References

1.2 Identified Requirements

1.3 Related Standards

2. Identified Requirements

3. Related Standards

• EBA - Published by the European Banking Authority at https://www.eba.europa.eu/