RISK SCENARIOS ARE MUCH MORE THAN CREDIT RISK
Most firms create scenarios around credit risk. These often refer to a macroeconomic downturn causing an increase in customers not paying their bills. However, there are many events that can significantly affect a firm. Although some of these events may also happen within a macroeconomic downturn, the impact of two or three strategic events occurring even in the best of times can have a dramatic effect on the possibilities of a firmâs survival.
Preparing for the extreme event
A firm can prepare itself by adopting a variety of defensive approaches. Many of these are good risk management and should already exist. However, scenarios test risk assessments and risk appetite and it is vital that the ...
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