Testing Stress - November 2024 Stress Testing Thought Leadership

PwC Australia (Nov 2024) "Testing Stress" thought-leadership piece argues stress testing has never been more critical, consistent with APRA's heightened emphasis on institution risk-management practice in response to geopolitical conflict, climate change, inflation and cyber threats. Governance principles cited: stress-testing models, methodologies, results and frameworks must be subject to credible challenge and regular review, including contextual challenge from business areas and sense checks so the exercise is not purely statistical or hypothetical; stress testing should inform calibration of risk appetite and limits, financial and capital planning, liquidity and funding risk, contingency planning and recovery/resource planning; data must be accurate, complete, granular and timely. BoE SWES learnings will feed APRA's FY25 system-wide stress test. Direct read-out for SEA-headquartered banks under MAS scenario expectations.