as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.
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what is the purpose of stress testing in liquidity risk management?
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stress testing aims to identify sources of potential liquidity strain under firm-specific and market-wide stress scenarios, helping to adjust business exposures, liquidity buffers, and possibly the firm's risk tolerance.
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