The act of simulating different financial market conditions for their potential effects on a portfolio of financial instruments.
Using a variety of scenarios and assumptions, the value of a given position in derivatives and hybrids is put through a sensitivity test (a stress test) to determine the loss exposure of the firm to changes in market conditions.
Sensitivity analysis of a loan portfolio to learn how it would perform under different scenarios (i.e. high delinquency and high margins, high delinquency and rapid prepayment, etc.).
A means of testing the accuracy of VaR models against "extreme" market conditions.
A testing technique conducted to evaluate a URL at or beyond at or beyond the limits of its specified requirements.
Testing the system under a load which is higher than expected in actual usage.
Also called an exercise treadmill test. It is useful for screening high risk populations, preoperative clearance, following patients with known heart disease, or in the diagnosis of chest pain or shortness of breath
Testing units at stresses higher than what would be encountered during normal operating conditions, usually to induce failures.
A process of determining how much the value of a portfolio can fall under abnormal market conditions. Stress testing consists of generating worst-case stress scenarios (for example, stock market crash) and revaluing a portfolio under those stress scenarios.
Testing conducted to evaluate a system or component at or beyond the limits of its specified requirements to determine the load under which it fails and how. Often this is performance testing using a very high level of simulated load.
This is the testing of a product under known load and extreme load; in particular, in terms of numbers of users, volumes of data and the measurement of the speed in which data is processed (known as testing performance). Traditionally, functional tests do not stress software. This is because it is normally possible to test functionality using very small amounts of data and a minimal number of users (thus the tests work well on a system with a small configuration). However, with careful design, functional tests can stress a system (indeed, they can show exactly which elements of functionality are working well under stress and which are not).
A process designed to measure market risk by observing the reaction of a portfolio, generally measured by changes in market value, when exposed to a variety of types of market movements.
Stress testing is a form of testing that is used to determine the stability of a given system or entity. It involves testing beyond normal operational capacity, often to a breaking point, in order to observe the results. Stress testing may have a more specific meaning in certain industries.
In software testing, stress testing refers to tests that determine the robustness of software by testing beyond the limits of normal operation. Stress testing is particularly important for "mission critical" software, but is used for all types of software. Stress tests commonly put a greater emphasis on robustness, availability, and error handling under a heavy load, than on what would be considered correct behavior under normal circumstances.