Mastering Risk Management

SCENARIO GOVERNANCE

As with any risk methodology or procedure, it is vital to ensure that the governance relating to the methodology is documented and understood. Good governance will enable the board and senior management to guide and direct the risk scenario strategy and to review its effectiveness. From a practical perspective, this will involve: setting the scenario objectives; defining the scenarios; discussing and promoting the discussion of the results of the scenarios; assessing potential actions and making clear decisions based on the results; fostering internal debate on the results of the stress tests and scenarios programme as a whole; and challenging prior assumptions such as cost, risk and speed for raising new capital or hedging/selling ...