Stress to reduce Distress
Distress lurks. Just out of sight. Perhaps around a corner, perhaps down the road just past your view.
For some their rule is “out of sight, out of mind”. For them, worry and preparation can start when, and if, distress comes into sight.
But risk managers see it as our jobs to look for and prepare for distress. Whether it is in sight or not. Especially because some sorts of distress come on so very quickly and some methods of mitigation take effect so slowly.
Stress testing is one of the most effective tools, both for imagining the potential magnitude of distresses, but almost more importantly, in developing compelling stories to communicate about that distress potential.
This week, Willis Wire is featuring a piece about Stress Testing in the “ERM Practices” series;
RISKVIEWS has features many posts related to Stress Testing: