Stress test

From ACT Wiki
Revision as of 08:26, 16 December 2014 by imported>Doug Williamson (Space to highlight subjectivity point.)
Jump to navigationJump to search

Stress testing is a form of scenario analysis in which worst case data are input into a financial model.

The idea is to test whether creditworthiness - or any other attribute being modelled - is robust enough to survive the selected 'worst case' scenario.

Stress testing necessarily involves a significant degree of judgement and subjectivity in identifying the appropriate worst case inputs with which to run the stress test.

See also