The Application of Scenario Analysis in Financial Risk Management

摘要

Financial globalization, the increasing variety and the size of financial derivatives make financial institutions and national financial markets face more risk factors, which in turn make risk management become more complex and difficult. Scenario analysis is a "forward-looking" approach, and it can conduct non-linear dynamic forecast to meet the current needs of risk management. However, the scenario analysis approach would not be a cost-effective risk management tool if we could not clearly understand the research goal, ensure the object of study, determine a reasonable scenario, make good use of risk indicators or choose an appropriate model, etc.