The incorporation of salient risks helps to use stress tests to “lean against the wind,” not just build a buffer for future losses. For example, the 2011 and 2012 scenarios incorporated possible severe stress in Europe. Inclusion of this factor may have led to greater awareness and better risk management of U.S. firms’ European exposures. 1  Dodd-Frank Act §165(i), 12 U.S.C. §5365(i).
2  See Board of Governors of the Federal Reserve System (2013), “Policy Statement on the Scenario Design Framework for Stress Testing (PDF),” final rule (Docket No. OP–1452), Federal Register, vol. 78 (November 29), p. 71443.