What if the institution has inadequate data?
Some institutions may indicate that they have inadequate data to conduct credible stress tests of their institution. In some situations the data may not be up-to-date or the institution may not have access to the breadth of data needed for a stress test. If an institution has inadequate data for implementing a credible stress testing program, its management and board should evaluate the feasibility of acquiring the needed data. At a minimum, institutions should maintain sufficient data for assigning accurate risk ratings and performing other loan portfolio management analyses. Associations should also maintain data which can provide a credible basis for generating proxy data and/or simulated portfolios for use in stress testing. If an institution does not have the data needed to enable it to stress test its portfolio based on borrower-level stress scenarios, it can assume certain PD and LGD migration scenarios. These PD and LGD migration scenarios should be well-supported by analyses e
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