Stress Tests – Corporate Provision Companies
Stress tests – Corporate Provision Companies
The main objective of supervision is to protect the rights of entitled beneficiaries as well as to ensure the stability and soundness of corporate provision companies (BVKs; Betriebliche Vorsorgekassen). Irrespective of this objective, in performing its duties, the Austrian Financial Market Authority (FMA) is required to consider the potential impact of its decisions on the stability of the financial system, in particular, in emergency situations, based on the information available at the relevant time. In times of exceptional volatility in the financial markets the FMA takes the potential procyclical effects of the measures it deploys into account. Stress tests, which are conducted by the FMA on a regular basis constitute one such instrument for undertakings. In stress tests, corporate provision companies are required to simulate how their business performs in particularly unfavourable scenarios. Such scenarios may include sharp declines in the capital markets, cyber attacks or liquidity shortages. Using pre-defined scenarios, the FMA is able to estimate the extent to which corporate provision companies are still able to permanently fulfil their commitments, even in adverse situations. Where applicable the supervisor may require individual undertakings to take measures to increase their resilience.
