Firms told to prepare for FSA stress testing
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The Financial Services Authority published recommendations at the end of December which will see reforms to the way firms stress test their business.
This will include reverse stress testing, where firms will have to consider the scenarios most likely to render their business model unviable.
Andrew Richardson, head of capital markets at BDO Stoy Hayward, says: “In the current climate many firms are not planning far enough ahead when considering the FSA’s financial resources tests.
“It is essential that firms take action to maintain adequate financial resources now and plan ahead for the future, rather than waiting until it goes all pear shaped.”
He adds: “We are seeing firms which are just burying their heads in the sand and hoping the current financial crisis will pass them by.
“Regular monitoring of a firms’ financial position is the only way to ensure that businesses will emerge from the crisis.”
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