Stress-testing is a generic term for the assessment of vulnerability of individual financial institutions and the financial system to internal and external shocks. Typically, it applies ‘What if’ scenarios and attempts to estimate expected losses from shocks, including capturing the impact of ‘large, but plausible events’. Stresstesting methods include scenario tests based on historical events and information on hypothetical future events. They may also include sensitivity tests. A good stress-test should have attributes of plausibility and consistency and ease of reporting for managerial decisions.