Capital Markets School

Internal Use Only

Stress Scenario Development

A robust set of scenarios includes: • Idiosyncratic • Systemic • Regulatory • Interactions between types of events • A range of possible outcomes: • Mild • Moderate • Severe

Internal Use Only

Stress Scenario Development

“If there is a possibility of several things going wrong, the one that will cause the most damage will be the FIRST to go wrong.” – Murphy’s Law, Extreme Version