PT  - JOURNAL ARTICLE
AU  - Julian N. Abdey
AU  - Jared S. Franz
AU  - Wesley K. Phoa
TI  - Scenario-Driven Adaptation to Emergent Risks
AID  - 10.3905/jpm.2022.1.419
DP  - 2022 Sep 08
TA  - The Journal of Portfolio Management
PG  - jpm.2022.1.419
4099  - https://pm-research.com/content/early/2022/09/07/jpm.2022.1.419.short
4100  - https://pm-research.com/content/early/2022/09/07/jpm.2022.1.419.full
AB  - In order to be resilient to unmodeled risks, an investment management process needs to incorporate a discipline of continuous scenario analysis. The authors describe the essential elements of such a discipline: key organizational and operating principles, the scenario building process, quantitative specification of scenarios, and application to portfolio management. They illustrate with several recent case studies: the COVID-19 pandemic, the 2021–2022 surge in global inflation, and the 2022 Russian invasion of Ukraine. They also list some potential pitfalls of scenario analysis.