How to Stress Test for Extremely Unexpected Scenarios | Straterix
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How to Stress Test for Extremely Unexpected Scenarios

How to Stress Test for Extremely Unexpected Scenarios

Like reality TV or Marmite, surprises aren’t to everyone’s taste. Sometimes they’re nasty (like the pandemic and the lockdowns it caused). Sometimes they’re nice (like the rapid market recovery prompted by unprecedented government stimulus). By definition, surprises are unexpected. No single market shock is a carbon copy of a previous one. And although we stress test for financial, European, and oil crises all the time, is it possible to stress test for totally unprecedented events? Not exactly, but – with a willingness to learn from history and a flexible, machine-learning-assisted approach – you can make a pretty accurate estimate of the range of outcomes. For more, check out Alla Gil’s latest column for the Global Association of Risk Professionals (GARP), which you can find here.