Banks Need to Improve Their Approach to Stress Tests

The Dodd-Frank Act (DFA) established the stress tests and Comprehensive Capital Analysis and Review (CCAR) to determine the stability of the banking system.  Since the stress and capital requirements tests were first implemented in 2009, we’ve observed that it has tended to help banks gain a better understanding of their overall risk profiles, better manage risks across lines of business and foster confidence, both among regulators and in the marketplace.