Skopje, 11 April 2023
“The National Bank is constantly investing resources in the strengthening of its own capacity, but what is even more important also in the banks' stress testing capacity. It is one of the main tools for determining and managing risks and vulnerabilities in the risk profile or business model of banks. They are not only an exercise that needs to be performed by banks for meeting the requirements prescribed by regulations or supervisors. Banks should conduct a series of different stress-tests, covering a series of different scenarios, taking into account the links between individual risks and market conditions. It is important for banks to use the results of the stress-testing.” This was emphasized by Viktorija Gligorova, the General Director of the Supervision Sector in the National Bank, in an interview given for the electronic bulletin of the Macedonian Banking Association.
Discussing the need for performing regular stress-testing by banks that supervisors use as one of the tools to assess the banks' resilience to various shocks, Gligorova referred to the Basel Principles for Effective Banking Supervision, underlining that “they suggest that the stress-testing needs to be an integral part of the entire management culture, including the risk management in the banks, and the results of the stress-testing should affect the decision-making, including the strategic business decisions at the highest level.”
The General Director of the Supervision Sector stresses that banks incorporate the stress-testing into the risk management system, as it points to the possible negative outcomes of the banks' exposure to various risks and provides information to banks and supervisors about the financial resources that would be necessary to absorb losses if such shocks occur.
Gligorova adds: “In the period ahead, one of the areas we will be focused on is the stress-testing related to green financing, which is also in line with the current efforts in this field at the international level.”
You can read the interview at the following LINK.
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