how to develop adverse scenarios

oxalisoxalis
in CIA.FCT

Hi,

I don't understand very well how to develop adverse scenarios, I read these from the text:

approaches in determining adverse scenarios: deterministic, stochastic, a combination of the 2 methods
how to develop adverse scenarios: reverse stress test and percentiles methods

we seem to answer the same question with inconsistent answers?

Thanks,

Comments

  • Staff-T1Staff-T1

    I don't see how these two scenarios are inconsistent - Reverse stress testing is a deterministic method whereas percentile methods are stochastic

  • oxalisoxalis

    Oh, so when asked about the methods/models to develop adverse scenarios, I can say:
    deterministic (percentile), stochastic(reverse stress test), a combination of the 2 methods?

  • Staff-T1Staff-T1

    Yup pretty much

  • oxalisoxalis

    great, thank you!

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