Stress testing involves subjecting a firm’s financial statements to extreme, hypothetical economic scenarios to evaluate structural resilience.

Scenario Profiles

• Sensitivity Analysis (What-If): Shifting a single key variable—such as a 15% drop in product selling price—to isolate its immediate impact on net income.
• Macro Scenario Tests: Simulating multi-variable economic crises, combining sudden spikes in global interest rates, currency drops, and industry sales declines.
• Historical Replications: Re-running past systemic crises (e.g., the 2008 Financial Crisis or 2020 Supply Shocks) against the firm’s current balance sheet liquidity.