Stress-testing

The big risks are here for all to see. Unpredictable geopolitical events (in focus every day). The ever-increasing potential for recession. AI-related shifts (yes, big opportunities but big risks). Cyber (nothing new but intensifying). How are boards responding?

Boards often suffer from insufficient time to stand back and think through the big picture – even when they know big issues are looming. So it’s a good time to think about what you can do to consider the “what ifs?”. Financial institutions are used to stress testing for regulatory purposes, but it needs to be in the boardroom from a strategic perspective too. And other types of business can also benefit from “kicking the tyres” of different short- and longer-term scenarios. But it’s quite easy to do it badly, dragging the board into too much detail and making it all seem pointless.

Here are a few points on what can be helpful…and what to avoid.