4.10. Liquidity Risk Stress Testing

Effective from Sep 24 2019 - Dec 31 2019
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110.	A FBB must conduct stress tests on a regular basis for a variety of short-term and protracted institution-specific and market-wide stress scenarios (individually and in combination) to identify sources of potential liquidity strain and to ensure that current exposures remain in accordance with the FBB’s liquidity risk tolerance.
111.	The stress test outcomes must be used to adjust the FBB’s liquidity management strategy, policies and positions and to develop effective contingency plans to deal with events of liquidity stress.
112.	Stress tests must enable the FBB to analyse the impact of stress scenarios on its overall liquidity positions, as well as on the liquidity positions of individual business lines.
113.	An FBB’s stress test scenarios and related assumptions must be well documented and reviewed together with the stress test results. Stress test results and vulnerabilities and any resulting actions must be reported to, and discussed with, the FBB’s Senior Management. Results of the stress tests must be integrated into the FBB’s strategic planning process and its day-to-day risk management practices. The results of the stress tests must be explicitly considered in the setting of internal limits.
114.	An FBB must decide how to incorporate the results of stress tests in assessing and planning for related potential funding shortfalls in its CFP.