Explain the concept of stress testing in banking risk management and discuss the various approaches used to conduct stress tests. Also, explain how credit risk mitigants can be identified.

Stress testing in banking risk management is a crucial tool used by financial institutions to assess the resilience of their portfolios and operations in the face of extreme but plausible adverse scenarios. The purpose of stress testing is to simulate the impact of economic shocks, financial market disruptions, or operational failures on the stability of the bank. By identifying vulnerabilities in a bank's financial health, stress testing helps banks to understand potential risks and take proactive measures to mitigate them.

There are several approaches used to conduct stress tests in banks, which can be broadly categorized into three types: sensitivity analysis, scenario analysis, and reverse stress testing.

1. Sensitivity Analysis: This is a method where the bank tests how changes ___ _______ ________ __________ _________ ______.
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