Framework for Streamlining Stress Testing Processes

This document is a technical report that outlines a framework designed to streamline stress and scenario testing (SST) for (re)insurance companies. The report addresses the increasing demands for SST due to evolving regulatory requirements and the need for comprehensive risk management. It identifies inefficiencies in the current siloed approach to defining stresses and scenarios for various purposes, proposing a consolidated framework to enhance efficiency, completeness, consistency, integration, and transparency in SST processes. The framework allows for the reuse of scenarios across different SST exercises, thereby reducing calculation efforts and ensuring that risks are adequately captured. The report describes key components of the framework, including the importance of mapping risks to stresses, maintaining an inventory of scenarios, and ensuring alignment with the (re)insurer's risk profile. Additionally, it provides a step-by-step guide for applying the framework, supported by practical use cases to illustrate its implementation.