Scenario analysis
Scenario Analysis (SA) is an assessment technique that is used to identify and measure the potential occurrence of operational risk events. Unlike traditional operational risk assessments, it is a forward looking “what if” analysis.
Scenario Analysis is designed to derive reasoned assessments of the likelihood
and impact of plausible operational losses from business and risk management experts. It is often
used to identify and measure events with low frequency but high severity losses, for example,
natural disasters, terrorism, and rogue traders. Along with its qualitative elements, it is often
used as a direct input into a firm’s operational risk capital estimate. You can use the Scenario
Analysis process in OpenPages® to construct Scenario
Analyses and collect supporting qualitative and quantitative data. Scenario Analyses are typically
created for Business Entities and assigned a Risk Category. You can also associate supporting ORM
data, for example, risk assessments, relevant loss events, ORIC losses, ORX losses, and risks.
Within each Scenario Analysis, you can record a range of frequency and severity estimates in
buckets
along with supporting information for the assessment. After the Scenario Analysis is
complete, you can run the Scenario Analysis Completion Helper to finalize the assessment and create
the Scenario Analysis Result object.