The credit crisis and resulting financial meltdown have highlighted the role of stress testing in complementing traditional risk models for gaining an enterprise-wide view of risk.
The unprecedented regulatory pressure on financial institutions to comply with Pillar I and Pillar II stress testing requirements and the weakness of the traditional siloed approach to stress testing has seen formal, integrated, and holistic stress testing emerge as a key requirement for financial institutions globally.
Oracle Financial Services helps financial institutions comply with Basel II, ICAAP, and stress testing mandates, while gaining a holistic view of their risk exposure.
Oracle's offering for stress testing is powered by Oracle Financial Services Advanced Analytics Infrastructure, an integrated and comprehensive framework that provides a platform for addressing the stress testing and modeling needs of a financial institution. Oracle's stress testing solution captures the effects of adverse risk events that are not estimated by standard statistical and business models, thus supplementing the modeling process and enabling compliance with the Pillar I and ICAAP stress testing requirements of the Basel II Accord. Additionally, complex scenarios based on historical events such as Black Monday, the Asian financial crisis, and the sub-prime crisis can also be modeled or can be based on expert judgment. The transparent and auditable nature of Oracle's stress testing solution enables financial institutions to demonstrate the robustness of their stress testing and risk management program to regulators. In combination with Oracle Financial Services ICAAP, Oracle Financial Services Advanced Analytics Infrastructure helps financial institutions fulfill their capital adequacy assessment and planning processes.