Stress Testing and Scenario Analysis

Explore how adverse conditions could affect exposures, portfolios and business decisions.

Historical results do not show every vulnerability an organisation may face. We help clients identify relevant adverse scenarios and examine how changing economic, market or sector conditions could affect financial outcomes.

We build scenarios around the client’s decision rather than starting with a standard template. Clients receive documented assumptions, quantified impacts, sensitivity analysis and a clear explanation of the findings and their limitations.

Steps and deliverables

7 steps, in order. The scope of each is agreed at the start.

  1. A hand holding a compass above a mountain ridge

    Decision objectives and risk-driver mapping

    We start from the decision the analysis must support and map the drivers that matter to it.

  2. A storm building over open fields

    Scenario design

    We design adverse scenarios around that decision rather than a standard template.

  3. Hands with a pen and a calculator over printed statements

    Data preparation and assumptions

    We prepare the data and document every assumption.

  4. A heavy wave breaking on a dark sea

    Impact analysis

    We quantify how each scenario could affect exposures, portfolios and financial outcomes.

  5. Three people in conversation around a low table by a large window

    Sensitivity and challenge sessions

    We test the results with your team and challenge the assumptions together.

  6. A working session at a round table, with notes and coffee between three people

    Management response options

    We set out the options open to management if a scenario begins to unfold.

  7. An empty boardroom table with a row of chairs

    Scenario report and presentation

    A report with quantified impacts, sensitivity analysis and a clear statement of the limitations.

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Risk Governance and Reporting

Build clearer responsibilities, stronger oversight and reporting that supports action.

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