In the aftermath of the 2008 financial crisis, enterprise-level stress testing has progressively been adopted as a primary credit, market and liquidity risk measurement tool for financial institutions and their regulators, Justifiably, it's considered to be the most reliable method for estimating the severity of losses from contagion and other non-linear risks. By contrast, efforts to devise reliable measurement techniques for operational losses have floundered, due to the absence of loss data and the infrequent. high-impact nature of operational loss occurrences.
The focus of this blog is to discuss and build consensus around a methodology to generate operational risk stress tests that mirror actual occurrences.
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