On November 15, 2016, the Government Accountability Office released a report highlighting limitations in the Federal Reserve stress testing programs. The GAO report noted three specific areas that could hinder the effectiveness of stress tests: qualitative assessment disclosure and communication, scenario design and model risk management. Specifically, the GAO faulted the Federal Reserve for not disclosing full information on its qualitative assessment approach, posing challenges to companies that must meet assessment goals and for not analyzing whether the severe scenario used for stress testing adequately reflects a full range of possible outcomes in the event of a crisis. The GAO report makes 15 specific recommendations, which it reported that the Federal Reserve "generally agreed" with and noted specific ongoing and future efforts to implement these recommendations.

The GAO press release is available at: http://www.gao.gov/products/GAO-17-48 ; the report is available at: http://www.gao.gov/assets/690/681020.pdf .

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.