Just 14 percent of financial services firms are confident their legacy technology systems can fulfill new stress testing requirements. That’s according to a poll of market participants who attended a recent Wolters Kluwer Financial Services stress testing webinar. The results are included in a newly released white paper from the financial services technology company, titled “Stress Testing: Putting the Pieces Together to Solve an Increasingly Intricate Puzzle”.
The report examines today’s global stress testing environment and suggests that banks are missing an opportunity to embrace stress testing as a discipline that is good for business, as well as compliance.
Following the financial crisis, stress testing has become a prominent feature of many regulatory rubrics, from Basel III to IFRS 9 Financial Instruments to the Dodd-Frank Wall Street Reform and Consumer Protection Act in the U.S. Although the added complexity will make stress testing more onerous, banks can view the requirements as a chance to integrate stress testing into an integrated risk management framework. As well as supporting regulatory compliance, such an approach serves a broader strategic purpose by encouraging a more stable and efficient entity, the report’s authors note.
“As stress testing becomes more intricate on a global level, more will be asked of the systems in place that monitor activities, gather data and apply models to analyze it,” said Richard Reeves, vice president of Strategy for OneSumX® at Wolters Kluwer Financial Services. “This is more than a compliance issue as stress testing fundamentally exists to evaluate how firms respond to a crisis. With the right systems in place there is an opportunity for firms to improve decision making, building stronger and more profitable institutions.”
Just last month Chartis Research named Wolters Kluwer Financial Services a Category Leader in its 2015 RiskTech Quadrant® on Enterprise Stress Testing Systems. According to Chartis, category leaders featured in the report, such as Wolters Kluwer Financial Services and its comprehensive OneSumX® governance, finance, risk and compliance solution suite, demonstrate a clear strategy for sustainable, profitable growth matched with best-in-class solutions.
In a related effort to help organizations navigate the stress testing landscape, Wolters Kluwer Financial Services will be speaking on the subject at an event held by CFP Events today and tomorrow. Nancy Masschelein, vice president, market management, Risk & Finance, EMEA, at Wolters Kluwer Financial Services, will provide an overview of how treasury and finance departments can work to better align risk, improving the regulatory oversight of stress testing. Paul Manson, European Sales director of Wolters Kluwer Financial Services will chair the second day of the conference, Stress Testing Europe 2015.