能否翻译一下C和D？

问题如下：

A newly hired banking supervisor at a financial regulatory agency is reviewing the stress testing program of a bank to ensure the program reflects the best practices presented in the Basel Committee's stress-testing principles. Which of the following suggestions can the supervisor make that would be consistent with best practice?

选项：

A.

The bank's management team should fully delegate critical stress testing responsibilities, such as setting objectives and defining scenarios, to experts in the risk management area.

B.

The bank's business units should individually estimate the impacts of stress scenarios without considering interactions between their unit and others, to accurately estimate the true risk of each unit.

C.

The bank should include scenarios in its stress tests featuring potential shocks to the bank's portfolio that have not occurred in the past.

D.

The bank should not consider system-wide liquidity in its stress testing, as this issue is outside the intended scope of these tests.

解释：

Explanation

C is correct. Prior to the 2007-2008 crisis, an overreliance on historical scenarios caused stress tests to be too mild and have durations that were too short. This also contributed to insufficient consideration of the risks created by introduction of new products and the new positions taken by banks.

A is incorrect. The involvement of the board and senior management is important; they should be involved in setting stress-testing objectives, defining scenarios, discussing the results of stress tests, assessing potential actions, and decision making.

B is incorrect. Stress tests should consider interactions between business lines so that banks can aggregate exposures and develop an enterprise-wide risk view. A number of institutions failed in this regard during the 2007-2008 crisis.

D is incorrect. A failure of stress testing prior to the 2007-2008 crisis was that the impact of stressed scenarios on liquidity was underestimated. The systemic risks stemming from banks' hoarding of liquidity were unforeseen.

Section Valuation and Risk Models

Learning Objective Describe the Basel stress testing principles for banks regarding the implementation of stress testing.

Reference Global Association of Risk Professionals. Valuation and Risk Models. New York, NY: Pearson, 2022. Chapter 8. Stress Testing.