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Comment on European stress tests

Leigh Bates, Head of Financial Services Practice, SAS, has commented on the latest European stress tests, the results of which are due at 5pm today.

Bates has pointed out that recently there has been speculation that the tests will not be fair as differing organisations do not apply them consistently, and that feedback from the tests may not necessarily prove accurate.

However, Bates has opined that this may neglect the long term goal of such tests, namely ‘futureproofing’ the industry.

Individual banks will be able to assess their own risks and strengths, and be able to adapt accordingly to stave off future disaster, protecting themselves but also the wider industry.

Bates went on to state that banks need to be able to assess not just past failings but their causes, and to be able to prevent such problems arising in the future.

Bates added that the inflexibility and inconsistency of the siloed approach to risk and stress testing cannot continue, and argued that the latest stress tests ought to be seen as the first step in a process, not a one-off event.

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