Bearing down

Using survey responses from Risk.net’s latest crowd-sourced scenario-generation exercise, analytics firm Sapiat created a range of stress scenarios. To do this, the modellers leveraged extreme yet plausible negative predictions from a handful of the most pessimistic respondents from the survey population – “the five bears”, as Tim Wilding, Sapiat’s head of research, dubs them. Three stress scenarios were generated, following the contours of the three original regimes (low, moderate and sharp inflation), and used to shock the same exemplar portfolio. “As a crowd within the crowd, the five bears are formulating a stress scenario that may appear somewhat extreme, but that is still strongly consistent with model assumptions,” says Wilding.

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