Much of the challenge around Stress Testing is efficiently industrialising what are effectively a series of one-off, deep dive and analytic exercises. With this solution, banks can instigate an enterprise-wide business-as-usual regime around Stress Testing and benefit not only from less complexity when their regulatory supervisor decides to assess medium term capital positions but also gain the ability to include Stress Test insights into the tactical and strategic management of the business. Would you like to know more about Basel III Stress Testing solutions? click here: http://www.secondfloor.com/solution/eframe-for-banking-basel-iii-stress-testing

1. eFrame®
for Banking Basel III
Stress Testing
One-Click Stress Testing for Basel III Compliance
www.secondfloor.com

2. eFrame®
for Banking Basel III
Stress Testing
One-Click Stress Testing for Basel III Compliance

3. The importance of Stress testing challenges
stress testing However, implementing a
standardised stress testing process
Stress testing is becoming an
across a large and diverse banking
increasingly important risk management tool in
organisation is easier said than done. In reality,
the banking industry and a critical capability for
banks come up against several major challenges
Basel III compliance. A comprehensive stress
when trying to conduct a comprehensive stress
test can reveal the resilience of organisations,
test, including:
business units and portfolios towards potential
crisis – and uncover areas for action and • Business complexity – a typical large
improvement. bank will deal in many different products,
portfolios and asset classes, with heavily siloed
It’s also an increasingly important exercise for
approaches to risk. The assumptions and
regulatory supervisors who need to monitor
calculations applied in one area during a stress
the strength of the banking system as a whole.
test may not be the same as those applied to
The European Banking Authority is requesting
another, making it difficult to get an accurate,
stress testing reports on a more regular basis,
overall view of risk exposure
putting pressure on banks to ensure they have
a robust, well-documented and organisation- • Manual effort – a huge amount of time and
wide stress testing infrastructure in place. effort is spent in locating, collecting, validating
and reconciling the relevant data, taking
valuable resources away from the business
• IT costs – the cost of implementing some
technological solutions for data aggregation,
analysis and reporting,
eFrame® offers major benefits such as a firm-wide
data warehouse or GRC
to banking institutions looking suite, can be significant
to standardise and automate • Repeatability
stress testing for improved – the production of
a stress test report
regulatory compliance and tends to be a manual,
a more strategic approach ad-hoc effort, with no
automated process for
to risk management. ensuring it is done the
same way every time –
making it hard to assess the cumulative effect
of risk management adjustments
• Data quality and integrity – when data
and calculations are being consolidated from
multiple business units and legal entities,
there’s poor insight into where the data
came from or who signed it off, undermining
management confidence in its quality
and integrity

4. A dedicated framework for • Transparent incorporation of existing
risk models, avoiding the cost and effort
group-wide stress testing associated with developing new or stress
Key features of eFrame® for Banking test-specific risk models
Basel III Stress Testing include: • Comprehensive workflow and approval
• A single framework to orchestrate stress process ensuring that all data and calculations
testing across multiple hierarchies, supervisory are submitted and validated by the correct,
jurisdictions, legal entities, business units, designated individuals, and within the report
products, portfolios and asset classes deadline
• Automation, reducing the time and effort • A full audit trail of all the data, calculations
needed to run a stress test, validate the results and individual actions contributing to the final
and consolidate them into a single report for stress test report
the regulator or senior management • A standardised, automated, documented
• A repeatable process enabling the test and auditable process for firm-wide stress
to be re-run at any time using the same testing, producing accurate reports that
assumptions tand scenarios, allowing the regulators and senior management can trust
impact of risk adjustments to be accurately
assessed Benefits
• A standardised approach that incorporates eFrame® for Banking Basel III Stress Testing is a
a standard definition of processes and software solution that creates a single platform
procedures, which enables financial institutions for firm-wide stress test reporting. In doing so, it
to apply a sound stress testing methodology enables an orchestrated, repeatable approach to
across the business stress testing at solo and group level, providing
firm-wide confidence in the face of complexity.
• Encompasses all types of risk exposure
(Credit Risk, Market Risk, Liquidity, etc.), With eFrame®, risk executives can quickly
the standard definitions will be aligned with implement and enforce a firm-wide process
a firm’s existing methodologies and systems and framework for automated, auditable and
by SecondFloor’s expert consultants consistent stress tests.
Capital requirement
Consolidation
Capital calculation
Calculators
Stress Test Actuals vs Appetite
Scenarios /Risk factors Capital
Model parameters Liquidity
Narratives
eFrame® Reporting
For Banking
Data Basel III Corep
Stress Testing
Counterparty ratings Finrep
Assets & Liabilities Other
TIME WINDOW PROCESS
DRIVEN CONTROL &
REPORTING AUDITABILITY
Collaterals & Exposures
Operational losses eFrame® creates a
Financial data
firm-wide platform for
Data Calculators
Value at Risk
regular stress testing
Liquidity ratios
at the click of a mouse.
Expected loss = PD x LGD x EAD

5. One-Click Stress Testing
Once implemented, firm-wide stress tests can Key features
be run in eFrame® with just one click – rather
than spending hours or days collecting, collating • owerful reporting solution for assessing
P
portfolio developments under stress
and reconciling individual reports.
• ensitivity analysis and calibration
S
Dataflow Visualisation functionality
With Analyzer, an optional eFrame® accelerator, • Integration with existing IT systems
firms can improve governance, auditability and
Basel III compliance by visualising the flow of
stress test data from its source to the final report,
and also mapping all the systems and processes
involved. This can provide a valuable ‘as-is’ view
for those looking to make a start on improving
the way stress tests are managed.
Key benefits
Powerful Reporting Capabilities • ignificantly reduce the time, cost and effort
S
eFrame offers three styles of
® to answer internal and regulatory requests
reporting that help firms meet • Reports that senior management can rely on
regulatory and management requests
for stress testing: • ccelerate and strengthen Basel III
A
compliance
• Standard reports: eFrame® comes with a
suite of standard, out-of-the-box reports, based • Fully traceable and auditable
on common internal and external requirements
• Custom reports: SecondFloor consultants
can implement additional custom reports
• Ad-hoc reporting: eFrame® enables users
Solution implementations
to run ad-hoc queries against the underlying SecondFloor consultants follow a standard
data to meet one-off information requests process when implementing eFrame®, so you
know upfront how long the project will take,
Auditability what it will involve, and how much it will cost.
Every eFrame® implementation includes data Contact us on info@secondfloor.com to request
historization, backtesting, and full audit trails a personal demo or to discuss your particular
as standard. requirements.
Works with existing systems Find out more
eFrame® works with a firm’s existing IT To learn more about how eFrame® can help
environment, including risk models and introduce an efficient, repeatable, firm-wide
calculation systems, integrating data from process for stress test reporting,
multiple sources to create an enterprise-wide contact us on +31 88 26 35 463
platform for stress test reporting. It doesn’t
email us at info@secondfloor.com
replace any existing systems, so it can be
implemented without disrupting business. or visit our website at www.secondfloor.com

6. For more details please contact
SecondFloor.
About SecondFloor
SecondFloor helps firms to comply
and produce regulatory information
efficiently, consistently. Companies
that turn to SecondFloor’ solutions
benefit from timely, complete, accurate,
traceable, auditable and repeatable
reports and analytics. Facilitating stress
testing, economic capital calculations,
and regulatory reporting in complex
environments are key elements of
SecondFloor’s credentials that have
established it as a successful enabler
of business analytics. eFrame®,
SecondFloor’s software application,
reflects best practice approaches and
project accelerators learned with clients
during years of experience. SecondFloor
is also an IBM risk analytics reseller.
Request a full demonstration
Would you like to have a personalized
demonstration of the eFrame® for
Banking Basel III Stress Testing solution?
Please contact us at
info@secondfloor.com or simply visit
www.secondfloor.com