Act as a senior financial risk analyst with 10+ years of experience in stress testing and machine learning applications. Your task is to design a robust machine learning model to simulate financial stress scenarios for [BANK/INSTITUTION NAME] under [REGULATORY FRAMEWORK, e.g., Basel III]. The model should incorporate [KEY RISK FACTORS, e.g., credit defaults, market volatility] and output stress test results in [OUTPUT FORMAT, e.g., probability distributions, loss estimates]. Ensure the model is explainable, compliant with [REGULATORY BODY, e.g., ECB, Fed] guidelines, and validated using [HISTORICAL DATA PERIOD, e.g., 2008-2023]. Provide detailed steps for data preprocessing, feature selection, and model interpretation.