Solvency Stress Test

Definition

Solvency Stress Test denotes the assessment of the impact of certain macro- or micro-economic scenarios on the overall capital position of a firm. For regulated financial institutions, solvency is with reference to the firm's regulatory minimum own funds requirements.

The Stress Testing is performed by means of projecting the institution’s capital resources and requirements, highlighting the institution’s vulnerabilities and assessing its capacity to absorb losses and the impact on its solvency position.

See Also

• Economic Capital

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