Stress testing, also known as scenario analysis or sensitivity analysis, is a risk management technique used by financial institutions, regulators, and businesses to assess the resilience, stability, and vulnerabilities of systems, processes, portfolios, or financial instruments under adverse or extreme market conditions, economic scenarios, or operational shocks. Stress testing involves subjecting the entity's assets, liabilities, income streams, and cash flows to hypothetical stress scenarios, such as market downturns, interest rate changes, credit defaults, liquidity shortages, or geopolitical events, to evaluate their impact on financial performance, solvency, and risk exposure. Stress tests help identify potential weaknesses, concentrations, or systemic risks in the organization's operations, capital adequacy, risk management frameworks, and contingency plans, allowing stakeholders to implement preemptive measures, capital buffers, or risk mitigation strategies to withstand and mitigate adverse outcomes. Stress testing is a critical component of risk assessment, capital planning, regulatory compliance, and crisis preparedness for financial institutions and businesses, enabling them to anticipate, manage, and mitigate potential risks and vulnerabilities in dynamic and uncertain environments.