Risk Management
Scenario Analysis
Definition
What is Scenario Analysis?
The estimation of outcomes under a defined combination of assumptions.
Example in practice
How This Looks in Practice
An analyst models high inflation, currency depreciation, and slower growth together.
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Related Terms
Risk Management
Stress Test
An analysis of portfolio performance under severe but plausible scenarios.
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The study of how an output changes when one input changes.
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The risk that managing too closely to or too far from a benchmark produces undesirable results.
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A model linking expected return to the risk-free rate, market risk premium, and an asset's beta.