Primer on the Forward-Looking Analysis of Risk Events (FLARE) Model: A Top-Down Stress Test Model
22 Pages Posted: 14 May 2020
Date Written: February 13, 2020
This technical note describes the Forward-Looking Analysis of Risk Events (FLARE) model, which is a top-down model that helps assess how well the banking system is positioned to weather exogenous macroeconomic shocks. FLARE estimates banking system capital under varying macroeconomic scenarios, time horizons, and other systemic shocks.
Keywords: Bank capital; Stress testing; Comprehensive capital analysis and review (CCAR); Dodd-Frank Act stress tests (DFAST); Financial stability and risk
JEL Classification: G18; G21; G28
Suggested Citation: Suggested Citation