The Stress Test Every Business Needs

1How resilient is your Capital Agenda?

Jeffrey R. Greene

Framing decisions within the Capital Agenda

The Capital Agenda is a comprehensive approach companies should use to manage capital, execute transactions, and apply practical corporate finance tools to strategic and operational decisions. This book synthesizes what we’ve learned over literally thousands of engagements helping clients as they navigated out of crises to confront technological disruption, unrelenting investor scrutiny, slow gross domestic product (GDP) growth, and geopolitical volatility.¹ EY’s Capital Agenda framework has been such a valuable tool that we’ve built Transaction Advisory Services around it, using it to set priorities for recruiting and talent management, innovation, and thought leadership.

Having a static Capital Agenda, however appropriate for your current environment, is not enough in today’s uncertain world. Long-term success comes from building resilience into each element of the Capital Agenda and in the way those elements interact. Banking regulators have mandated well-defined parameters for stress tests of our most important global financial institutions. We believe every nonfinancial company should adopt an analogous approach to “future-proofing” its Capital Agenda.

We use a broader, more strategic definition of stress that encompasses not only traditional macroeconomic, sovereign-risk, and commodity- related shocks—such as interest rates, recessions, oil prices, and expropriation—but ...