Scenario Analysis
What is Scenario Analysis?
A process of analyzing possible future events by considering alternative plausible risk scenarios and their potential impacts on the organization.
Terms that appear alongside scenario analysis
Each of these is named in at least one of the same controls as scenario analysis. The number is how many controls name both.
- resilience 11 shared controls
- governance 7 shared controls
- risk assessment 5 shared controls
- operational risk 5 shared controls
- stress testing 3 shared controls
- risk taxonomy 3 shared controls
- risk reporting 3 shared controls
- risk committee 3 shared controls
Frameworks that govern scenario analysis
What the standards actually require on scenario analysis
Requirements naming scenario analysis across 6 standards, quoted from the control text.
IFRS S2 Climate-related Disclosures applies the IFRS S1 4-pillar framework specifically to climate-related risks and opportunities + supersedes TCFD recommendations.
ISSB-IFRS-S2-Climate-Governance-Strategy-Resilience-ScenarioAnalysis-TransitionPlan-Paris · ISSB IFRS S2 Climate-related Disclosures + Climate Governance + Strategy + Climate Resilience + Scenario Analysis + Transition Plan + Paris Agreement Alignment + Net Zero by 2050 →If scenario analysis is used in assessing the resilience of business strategy to climate related risks, describe the scenarios, parameters, assumptions, expected impacts, and how the analysis informed strategy.
SEC-CLM-08 · Scenario Analysis Disclosure →The risk management framework must include forward looking scenario analysis and stress testing programs proportionate to the size, business mix and complexity of the institution and built on severe but plausible assumptions.
CPS220-14 · Scenario Analysis and Stress Testing Programs →Use climate related scenario analysis commensurate with the entity's circumstances to assess resilience of strategy and business model, including at least one scenario aligned with the latest international agreement on climate change.
SASB-CLM-03 · Climate Scenario Analysis →Disclose an assessment of the climate resilience of strategy and business model using climate related scenario analysis, including the method used, the scenarios and inputs, and the time horizon applied.
AASB-S2-P22 · Climate Resilience and Scenario Analysis →All covered sources must document worst-case release scenarios per 40 CFR §68.25 (full vessel quantity release assumptions for toxic gases, 1 cm pool spill for toxic liquids, 10% yield VCE for flammables).
epa-rmp-40-cfr-68::68.25 · Worst-case and alternative release scenario analysis →Questions people ask about scenario analysis
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