1. Lack of appropriate governance (effective challenge, documentation, inadequate or ineffective internal

controls).

2. Over-use, misapplication or inadequate review of qualitative adjustments (overlays) and qualitative

analyses in the capital planning process.

3. Deficiencies in data and management information systems (extrapolation, lack of data, missing data

points).

4. Program sustainability and process controls.

5. How to leverage the stress testing and capital management process for budgeting and planning.

6. Inadequate or incomplete risk identification and management.

7. Insufficient support for assumptions, lack of consultation with business SMEs or insufficient

granularity/complexity in models.

8. Unrealistic or unsophisticated approaches to loss and revenue projection or poor model fit to the

scenarios.

9. Inconsistent modeling across expected loss (e.g., Basel II EL & ALLL), unexpected loss (e.g.,

regulatory & economic capital), and stress testing.

10. Inadequate understanding of modeling software functionalities and validation of vendor models.

Top 10 Issues for Stress Testing