Q.97 An investment bank has hired external consultants to review its stress testing procedures. After a month of thorough investigations, the consultants came up with the following comments:

I. The bank has ensured an appropriate coverage in stress-testing activities, as the stress testing is applied to the business line, portfolio, and risk type levels, and not on an enterprise-wide basis.

II. Stress testing should be conducted over various relevant time horizons. The bank should concentrate not on conditions that may materialize in the near term but also on adverse situations that take longer to develop.

Which of the comments is (are) correct?