Mastering Risk Management

DEVELOPING A SET OF PRACTICAL SCENARIOS

Using risk and control self-assessments

The points above are a helpful starting point for developing relevant scenarios. But it is equally possible to develop scenarios by considering the key risks to the firm and assuming that several of the key risks occur either simultaneously or within appropriate timescales. This has the advantage of clearly being relevant to the firm, as the key risks have already been identified through risk and control self-assessment. However, this method of development, if used as the only method, has the disadvantage that extreme risks not identified during the assessment will not be used. Ideally, scenarios should be developed with the key risks in mind together with any other ...