To: All Licensed Banks Operating In the Sultanate of Oman

After Compliments,

Subject: Stress Testing Guidelines

1. Stress Tests have become a popular tool to assess potential vulnerabilities across the globe. While banks use it to monitor their respective individual health, bank regulators use it to gauge the lurking systemic risks.

2. CBO introduced the bottom-up stress testing in 2014. Since then evolution in operating landscape and risks have necessitated a reevaluation of the current bottom-up stress testing practices. Moreover, over time, banks have also gained substantial experience in conducting the stress testing which allows for further stress testing improvements in terms of scenarios, assumptions and modeling. Considering, these, CBO has issued new guidelines on bottom-up stress testing.