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Scenario analysis

S

ST6_aspirant

Member
"Scenario analysis would be useful as some of the risks ex operational risks are hard to quantify"

So that would mean that we increase expenses or mortality and see impact?
 
Increasing expenses or increasing mortality and modelling the impact would be a sensitivity test (if by a small amount) or a stress test (if by a more extreme amount).

Scenario analysis is a more qualitative technique, used for risks which are not easily assessed using modelling. The process involves considering a plausible adverse scenario and considering the implications for the company if that scenario were to occur, e.g. by using expert input. It is described in more detail in Section 4.1 of Chapter 43.
 
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