Tougher capital adequacy Prudential Requirements includes appropriate proactive stress testing of liquidity. While some regulators have clearly defined standards and required actions, some do not. Therefore, a firm can be left to interpret the policies and respond according to internal risk management and regulatory compliance policies.

• Carry out stress testing and scenario analysis of liquidity needs.
• Put contingency funding plans in place to deal with a liquidity crisis were it to occur.
• Document its liquidity risk management policy.

In recent times, stress testing has become a more significant area of supervisory regulatory interest. Stress testing analyses the impact of changes in the current values of the relevant risk factors on a firm's financial position. ScenarioManager takes a "What if?” analysis approach to calculate a firm's financial position against a consistent set of historical or hypothetical risk factor values.

ScenarioManager produces daily reports using the end of the previous day's data from a client's systems to determine the impact of various stresses on a firm's liquidity. ScenarioManager will automatically operate on all relevant data from one or many client core systems. All data may be presented to ScenarioManager in any format convenient to the client.

Multiple scenarios can be created, ranging from the foreseeable through to the statistically unexpected. The assumptions underlying these scenarios can be reviewed and adjusted on an ad hoc basis. ScenarioManager can apply different scenarios and calculate the impact of the assumptions that are held in the scenario. Multiple tests may be applied to any one set of data.

ScenarioManager is operated either on demand or automatically via data and report process configured to operate the daily reporting process. In addition, all reports can be automatically distributed to the appropriate staff and saved for auditing and comparisons. By delivering all of the relevant daily information. ScenarioManager can offer managers a level of comfort regarding liquidity forecasts and provide strategic guidance for contingency funding decisions.

ScenarioManager offers a straightforward, structured and secure approach to stress testing, unlike processes such as spreadsheets that can be error prone, or other complex approaches that can be very costly. ScenarioManager helps meets regulatory liquidity reporting requirements and provides critical management information. ScenarioManager also provides considerable advantages to clients wishing to upgrade their ability to evidence a response to Basel II Pillar 2 supervisory review capital requirements demands.

• Any combination of customer type, product, currency, country or other client-specific indicators can be configured as triggers to define scenario conditions.
• One or more stress parameters and collective scenarios can be preset and automatically administered, or varied on an ad-hoc basis to process all tests according to your liquidity policy.
• Scenario reports are provided per day, per scenario for all inflow and outflow variables available for analysis and can be automatically produced from the defined daily input data set.
• Trends in % mismatch or other changes in asset yields over time may be highlighted to report all scenarios in need of escalation according to your policy.
• All Reporting outputs may be easily produced on a daily basis for printing and distribution or saved, audited, and compared period-on-period.
• Alternative financial scenarios can be created to assess assets and liabilities that result in mismatched positions with a specific focus on detailed inflows, outflows, and potential mismatches in the next 4 weeks, and ongoing maturation point bands thereafter.
• Historical scenario outputs may be saved and recalled for comparison and analysis at a later date.
• A full break down of the underlying causes of is available for audit purposes.