Is it possible to undertest or under-assess students?

Yes, it's possible to undertest or underassess students. For instance, having one formal assessment per semester isn't going to give you much information. For one thing, students won't realize that they didn't understand the material until it's too late. And the teacher will also be unaware of how their students are doing during the class.

There has to be a balance with assessments. Too many, and that's the entire focus; too few, and the information you get from it is inconsistent and unhelpful.