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.
The entity applies climate-related scenario analysis in a way that suits its circumstances (B1 to B18: exposure to climate risks and opportunities and available skills, capabilities and resources, reassessed each time;
issb-standards::S2-22 · S2.22: Climate resilience and scenario analysis →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 →The organisation states whether it uses scenario analysis to identify environmental outcomes and, if so, gives each scenario (for example IEA NZE 2050, NGFS, RCP or SSP physical scenarios), its type, coverage, temperature alignment, parameters, assumptions, ti...
cdp-formerly-carbon-disclosure-project::5.1 · Questions 5.1 to 5.1.2: Scenario analysis →The owner or operator must identify and analyse at least one alternative release scenario for each regulated toxic substance in covered processes and at least one representing all flammables, each more likely than the worst case and reaching an offsite endpoin...
epa-risk-management-program-40-cfr-part-68::68.28 · § 68.28 Alternative release scenario analysis →The ORSA must also analyse the macroeconomic situation and possible market developments (interest rates and spreads, market indices, inflation, interconnectedness, climate change, pandemics and catastrophes), on supervisory request macroprudential concerns and...
solvency-ii::R25-Art.45 · Arts 45, 45a as amended (from 30 January 2027) Extend the ORSA to macroeconomic, macroprudential, liquidity and 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 →Questions people ask about scenario analysis
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