European bank stress tests are one of the world's biggest risks going into 2014, Huw van Steenis, head of European financial services research at Morgan Stanley, has told CNBC.
Speaking at the World Economic Forum in Davos, van Steenis said investors were eyeing the tests to ensure the sector has "brought out the bodies" from the past.
"There are plenty of risks out there and through this year, a critical event for me is getting through the stress tests and the asset quality review," he said.
"We need to know that European banks are cleaned up, and that's a key risk I'm watching for."
(Read more: 'Doom loop' spells danger for Europe's debt markets)
The European Central Bank (ECB) has developed has a set of tough criteria for its stress tests of the euro zone's banks, designed to analyze lenders' ability to withstand adverse economic conditions. The region's 128 most important banks will undergo an assessment of their risky assets, the quality of their balance sheets, and the amount of capital they hold.
"For the top 20 banks, I think it will show that on the whole that they are reasonably well capitalized," Van Steenis said. "Of course - like any exam - there will be (banks) that pass and fail."