(a) Provide a forward-looking assessment of risk exposures under stressed conditions, enabling banks to develop appropriate risk-mitigating strategies (e.g. restructuring positions) and contingency plans across a range of stressed conditions;

(b) Improve the bank's understanding of its own risk profile and facilitate the monitoring of changes in this profile over time;

(c) Inform the Board and senior management on the setting of the bank's risk appetite or tolerance and the determination of whether its risk exposures are commensurate with the stated risk appetite or tolerance;

(d) Supplement the use of statistical risk measures (e.g. value-at-risk or economic capital models) which are based mainly on historical data and assumptions, and contribute to the modelling of the risks associated with new products or activities where there is a lack of sufficient historical data. Stress-testing helps quantify "tail" risk (i.e. the risk of losses under extreme market conditions) and re-assessment of modelling assumptions (e.g. those in relation to volatility and correlation);

(e) Evaluate the bank's existing and potential vulnerabilities on a firm-wide basis (e.g. emerging risk concentrations) and its capacity to withstand stressed situations in terms of profitability, liquidity and capital adequacy;

(f) Improve the bank's strategic, annual business plan, capital plan, liquidity plan and funding plan; and

(g) Support internal and external communication regarding the bank's risk appetite or tolerance, risk exposures, and risk-mitigating strategies.