Alternative US and Global Scenarios

We cover it all: capital-plan, credit, market and liquidity risks

Our proven model-based macro scenarios assist financial institutions and corporate customers with all aspects of design, development and implementation of macro scenarios used to understand their total risk profile, conduct rigorous stress tests that meet regulatory requirements and accounting standards, provide transparency, and promote confidence in existing business practices.

We leverage our award-winning model of the US Economy and our Global Link Model to understand the impacts of alternative-scenarios across sectors and throughout global and regional economies. The scenarios equip our customers with the data, results and understanding needed to complete their internal capital stress and planning processes whether to satisfy regulatory requirements, accounting standards, or internal processes. Our solutions span global, US national and regional territories and provide the highest level of transparency and rigor.

CCAR, DFA, PRA and EBA testing

Our scenarios help financial institutions stress test their balance sheets against supervisory scenarios to comply with Comprehensive Capital Analysis and Review (CCAR), Dodd-Frank Act (DFA), Prudential Regulation Authority (PRA) and European Banking Authority (EBA) requirements. We work with our customers to understand their risk profile and vulnerabilities as inputs to design and expand idiosyncratic scenarios specifically designed to the BHC scenarios. Scenarios usually extend five years with longer time horizons available.

Our services include:

Carefully crafted narratives for each of the scenarios, including comparative tables and charts
Fast turnaround after the time the regulatory body releases its assumptions
Frequently updated scenarios
Customer support
Transparent model documentation
Access to supporting driver data and models
Scenarios extension to 30 years is possible

CECL scenarios

Financial institutions required to evaluate credit losses according to the new accounting model issued by the Financial Accounting Standards Board (FASB) can use our suite of alternative scenario forecasts for the US national and regional geographies to develop impairment estimates required for Current Expected Credit Loss (CECL) compliance. We have taken care to consider where we are in the business cycle, volatility in the forecasts and other technical issues.

Our service includes:

National and regional forecasts a base forecast, two optimistic and three pessimistic scenarios, updated quarterly
Quarterly narratives that accompany the scenarios
Probability weighted scenarios that use results from our proprietary factor model
Access to our team of economists
Quarterly webinars discussing changes to the scenarios and forecasts

Our models, underlying narratives and assumptions differentiate the scenarios and can provide short-term (three years) to long-term (30 years) forecasts from our macro models. Horizon extensions are available. For model-using clients, we can provide solution files that allow you to refine the scenarios to suit your own narrative or create additional variations to assess a wider set of scenarios. Learn more.

IFRS9 scenarios

The new accounting rules, mandated by the International Financial Reporting Standard, require institutions to move from using a fair market valuation to using a forward looking or expected loss criteria. Our scenarios provide reasonable and supportable forecasts using our award-winning models. Our IFRS9 solution uses a proprietary small-scale macro model that provides users 700 to 1000 rank-ordered simulations and produces quarterly probability-weighted expansions needed to judge reserving requirements.

Our service includes:

Expansions a set of off-the-shelf or of client-chosen scenarios to provide global, US and regional forecasts
Quarterly scenario updates available either as a refresh update to original, or as a newly chosen scenario expansion
Available for the US and Global scenarios

We can provide solution files that allow you to refine or expand the scenarios to suit your own narrative or create additional variations to assess a wider set of scenarios.

Global stress testing

The Global Link Model is the most comprehensive global macroeconomic model commercially available. Designed for forecasting and scenario planning, it links 68 individual country models with each other and with key global drivers of performance. The model accounts for 95% of global GDP, covering more countries and time series – from 250 to 500 per country – than any other market offering. With quarterly updated baseline forecasts and 30-year outlooks, you have all the data you need for current decisions, as well as longer term planning. Our own economists and analysts use the model to produce their award-winning industry forecasts. The Global Link Model provides full access to the model, continued technical support, three detailed scenario assumptions per quarter, and an executive summary describing the output and context.