6.1 Portfolios

A portfolio serves as a structured collection of financial assets or liabilities held by a bank or financial institution. These portfolios are subjected to various analysis and stress tests to assess their performance under different scenarios and to manage risks effectively.

Portfolio definitions can vary widely based on a user's preferences and the specific objectives of stress testing. You can define portfolios broadly, encompassing a diverse range of assets or liabilities, or opt for more granular definitions focusing on specific sectors, industries, regions, or types of financial products.

The primary purpose of subjecting portfolios to stress tests is to evaluate their resilience and performance under adverse economic conditions or unexpected events. This helps banks and financial institutions identify potential vulnerabilities and develop strategies to mitigate risks.