What is Scenario Analysis?
Scenario Analysis A risk management technique that evaluates the potential impact of different future events or market conditions on financial performance, often used in stress testing, capital planning, and regulatory reporting.
Source: CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework
How is “Scenario Analysis” Used in Practice?
Banks conduct scenario analysis to assess the effects of macroeconomic shocks on capital adequacy and liquidity under regulatory guidance.
Certification Exam Relevance
Who Needs to Know This Term?
- Financial Analysts
- Bankers
- Traders
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What is Scenario Analysis?
A risk management technique that evaluates the potential impact of different future events or market conditions on financial performance, often used in stress testing, capital planning, and regulatory reporting.
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