Illustrative: an ensemble of trajectories, its quantile fan and the outcome as it is observed

Risk Academy, led by the Nexus Consortium · Course catalogue · Risk Science and Methods

Decision, Behaviour and Communication

Scenario analysis and stress testing

Scenario analysis and stress testing, taught twice over: as the working methods of the field and as its frontier since 2024, with labs on the Academy's tools, open data and the Nexus Standards.

Core course Frontier course

The discipline

01Core course · L2 Intermediate

Scenario analysis and stress testing: foundations and practice

This area covers the design and use of scenarios and stress tests: narrative and quantitative scenarios, severity and plausibility, reverse stress testing, climate and systemic stress tests, sensitivity analysis and the governance of scenario work, including exercising scenarios with decision makers.

Level
L2 Intermediate
Study time
about 24 hours (planning estimate)
Status
In authoring
Prerequisites
An L1 course in the area, or an entry review

Why now

Disclosing scenario models improves scrutiny of scenario design and governance but may affect how banks prepare. Board of Governors of the Federal Reserve System, Proposed 2026 Stress Test Scenarios, 24 October 2025

Learning outcomes

  1. Define scenario and the other key terms of the discipline and use them correctly in a written case
  2. Explain scenario design and narrative and quantitative scenarios with a worked example and its source
  3. Apply the discipline's method to a documented case and explain each result with its source
  4. Analyse a named case against reverse stress testing, stating evidence, date and limits

Modules

  1. Scenario design
    • Scenario design
    • Narrative and quantitative scenarios
    • Reverse stress testing
  2. Climate scenarios
    • Climate scenarios
    • Systemic stress testing
    • Sensitivity analysis
  3. Scenario governance
    • Scenario governance
    • Exercising scenarios
  4. Lab: the discipline's method
    • A stress scenario is a path for a driver, chosen by severity rather than by probability; a sensitivity turns the driver into stressed default rates; those rates, loss given default and exposure give a loss; the loss is taken from capital and the remaining ratio is compared with a hurdle, and a reverse test asks how severe the path must be before the hurdle fails.
    • Work the method through a documented case and explain each result
    • Read the method's sources and stated values

Labs with Academy tools

Nexus Standards

Teaches

  • NRS-C5 Scenarios and stress testing

Relies on

  • NS-1 The UNI and the artefact catalogue
  • NS-16 UNI application profile (how articles, documents, code, data, APIs and interfaces carry the UNI)
  • NRS-C1 Risk vocabulary and ontology
  • NRS-C2 Risk assessment method
  • NRS-C8 Evidence, uncertainty and provenance
  • NRS-C9 Risk models, methods and validation

Assessment

  • 40%Lab recordWork the discipline's method through a documented case and explain each result with its source and date
  • 40%Case memoApply the discipline's methods to a named place or organisation, stating evidence and limits
  • 20%Key terms checkShort answers on the key terms, marked against the definitions

Delivery

  • Self-paced online, with the labs in the browser
  • Cohort study over six to eight weeks, with a weekly lab review
  • Co-delivered with a partner institution, inside its own courses

Partner on this course

  • Co-teach a module and bring a current case from your work
  • Host a cohort for your learners, with your own schedule and review
  • Contribute a lab: a dataset your institution publishes openly, or a model
  • Review the course content and its references before it opens
  • Translate the course and adapt its cases to your region

How institutions and experts take part

In the Academy LMS

Course on the learning platform
Intermediate, 4 topics
Cohort group
A community group for each cohort of learners
Achievement
Recorded on completion of the assessed work

Open now in this discipline

References

  1. Board of Governors of the Federal Reserve System, Proposed 2026 Stress Test Scenarios, 24 October 2025
  2. Basel Committee on Banking Supervision, Stress testing principles, 2018
  3. Borio, Drehmann and Tsatsaronis, Stress-testing macro stress tests: does it live up to expectations? Journal of Financial Stability, 2014
  4. Acharya, Engle and Pierret, Testing macroprudential stress tests: the risk of regulatory risk weights, Journal of Monetary Economics, 2014
02Live map

Hazards and exposure in Italy

Flood water, active fires and surface heat beside population and night-time lights, over Italy.

The interactive map needs JavaScript; the layer list and sources are below.

Layers 3

Hazards and exposure

Latest available

NASA GIBS / EOSDIS · ASTER GDEM (METI, NASA) · Blue Marble (NASA) · © OpenStreetMap contributors (ODbL) · Natural Earth

Loading the latest NASA imagery.

Drag to move. Ctrl or ⌘ and scroll, pinch or the buttons to zoom; hover for the values under the pointer; reset returns to the region.

Hazards and exposure, framed on Italy.Satellite and model products as NASA publishes them, each with its own date. They are indicators, not assessments of any place.

Data: NASA GIBS · ASTER GDEM · Blue Marble · © OpenStreetMap contributors · Natural Earth · NASA EONET · U.S. Geological SurveySources and licences

  • We acknowledge the use of imagery provided by services from NASA's Global Imagery Browse Services (GIBS), part of NASA's Earth Science Data and Information System (ESDIS). Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). NASA open data
  • We acknowledge the use of imagery provided by services from NASA's Global Imagery Browse Services (GIBS), part of NASA's Earth Science Data and Information System (ESDIS). Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). NASA open data
  • VIIRS near-real-time products (flood, land surface temperature, snow cover, corrected reflectance), NASA LANCE; imagery via NASA GIBS. Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). NASA open data
  • NASA Fire Information for Resource Management System (FIRMS), VIIRS 375 m active fire product, NASA LANCE; vector tiles via NASA GIBS. Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). NASA open data
  • Center for International Earth Science Information Network (CIESIN), Columbia University. 2018. Gridded Population of the World, Version 4 (GPWv4): Population Density, Revision 11. NASA Socioeconomic Data and Applications Center (SEDAC). Licensed under CC BY 4.0. Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). doi:10.7927/H49C6VHW. CC BY 4.0
  • VIIRS Black Marble night-time lights, NASA Goddard Space Flight Center; distributed by the NASA Level-1 and Atmosphere Archive and Distribution System (LAADS DAAC); imagery via NASA GIBS. Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). NASA open data
  • MODIS and VIIRS atmosphere products, NASA LANCE and LAADS DAAC; imagery via NASA GIBS. Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). NASA open data
  • ASTER GDEM is a product of METI and NASA (ASTER Global Digital Elevation Model V003, NASA LP DAAC); imagery via NASA GIBS. Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). Cite as: NASA/METI/AIST/Japan Spacesystems and U.S./Japan ASTER Science Team (2019). ASTER Global Digital Elevation Model V003. doi:10.5067/ASTER/ASTGTM.003. NASA open data
  • Made with Natural Earth. Free vector and raster map data @ naturalearthdata.com. Public domain
  • © OpenStreetMap contributors (ODbL), via NASA GIBS (coastlines, boundaries, roads and place names). Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). ODbL
  • Blue Marble, NASA Earth Observatory; imagery via NASA GIBS. Colours redrawn from the published colour map; values averaged into H3 cells where shown (modified). NASA open data
  • Context on the globe and flat map: coastlines, boundaries, roads and place names from NASA GIBS reference layers (OpenStreetMap data, ODbL, © OpenStreetMap contributors); Blue Marble imagery as an optional base; 3D terrain and the elevation read-out from the ASTER GDEM elevation colour index (5 m to 200 m classes, exaggerated for legibility). Boundaries are drawn as published and imply no position on any territory.
  • Globe: MapLibre GL JS 6.9.1, BSD-3-Clause, © MapLibre contributors.
  • Live events: NASA Earth Observatory Natural Event Tracker (EONET); events are indicative and keep their original source links.
  • Live: NASA EONET Events are indicative, not authority warnings.
  • Live: U.S. Geological Survey Events are indicative, not authority warnings.
  • NASA GIBS: We acknowledge the use of imagery provided by services from NASA's Global Imagery Browse Services (GIBS), part of NASA's Earth Science Data and Information System (ESDIS).
  • River discharge forecast, 30 days with range (GloFAS via Open-Meteo): Contains modified Copernicus Emergency Management Service information 2026; not a flood warning.
  • Weather data by Open-Meteo.com (https://open-meteo.com/), licensed under CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/).
  • Optional layers (10 sources in the layer list: live, forecast, observed and context) print their provider credit on the map and here when switched on; forecasts are model output and derived indices are estimates.

Layers and dates

  • Flood water, 3-day composite: VIIRS Global Flood Product, NASA LANCE · 14 Oct 2026
  • Active fires and thermal anomalies: VIIRS NOAA-20 375 m (FIRMS), NASA LANCE FIRMS · 13 Oct 2026
  • Population density, 2020: Population: CIESIN, Columbia University, Gridded Population of the World v4.11 (2018), NASA SEDAC, CC BY 4.0 · static
  • Land surface temperature, day, 8-day composite: VIIRS NOAA-20 Level 3, 8-day, NASA LANCE · 14 Sep 2026
  • Night-time lights, daily: VIIRS Black Marble (VNP46A2), NASA LAADS DAAC · 12 Oct 2026
  • Aerosol optical depth, daily: VIIRS NOAA-20 Deep Blue AOD, NASA LANCE · 13 Oct 2026

03How learning runs

How learning runs, as a process you can run

Select a scenario and press Play: course, pathway, practice, faculty, cells and record.

04What is changing

Frontier course · L3 advanced, programme courses and standards

Scenario analysis and stress testing: frontier methods

The methods, data, tools and studies that changed scenario analysis and stress testing between 2024 and 2026, taught by reproducing them on open data.

Level
L3 Advanced
Study time
about 28 hours (planning estimate)
Status
Planned
Prerequisites
Scenario analysis and stress testing: foundations and practice; Working knowledge of a scripting language (Python or R) for the labs

Why now

Disclosing scenario models improves scrutiny of scenario design and governance but may affect how banks prepare. Board of Governors of the Federal Reserve System, Proposed 2026 Stress Test Scenarios, 24 October 2025

Learning outcomes

  1. Explain what changed in scenario analysis and stress testing since 2024 and cite the studies, data or rules behind each change
  2. Reproduce federal Reserve opened stress test scenarios and models to comment on open data and state the uncertainty of the result
  3. Evaluate a 2024 to 2026 study: its question, data, method, limits and what it changes for practice
  4. Design an analysis that combines a frontier method with the faculty's instruments, and justify each choice

Modules

  1. Federal Reserve opened stress test scenarios and models to comment
    • The Federal Reserve published proposed 2026 stress test scenarios for public comment, together with a new small-scale macroeconomic model and the model used to generate the global market shock.
    • Disclosing scenario models improves scrutiny of scenario design and governance but may affect how banks prepare.
    • Board of Governors of the Federal Reserve System, 24 October 2025
  2. EBA 2025 stress test projected 370 basis point capital depletion
    • The 2025 EU-wide stress test of 64 banks covering about 75 per cent of EU banking assets projected EUR 547 billion of losses and a 370 basis point CET1 depletion under the adverse scenario, leaving a 12 per cent ratio.
    • It provides a benchmark of adverse scenario severity and capital impact for European bank stress testing.
    • European Banking Authority, 1 August 2025
  3. Bank of England completed its first system-wide market stress scenario
    • The system-wide exploratory scenario involved about 50 banks and non-banks and traced how margin calls, repo, asset sales and redemptions could amplify a market shock, revealing mismatches in firms' expectations of each other in stress.
    • It shows how system-wide scenarios can expose interaction effects that single-firm stress tests miss.
    • Bank of England, 29 November 2024
  4. Reproduction lab
    • Extend the discipline's method with one frontier method and compare its results
    • State the uncertainty and the limits of the result
    • Peer review against a shared checklist

Labs with Academy tools

Nexus Standards

Teaches

  • NRS-C5 Scenarios and stress testing

Relies on

  • NS-1 The UNI and the artefact catalogue
  • NS-16 UNI application profile (how articles, documents, code, data, APIs and interfaces carry the UNI)
  • NRS-C1 Risk vocabulary and ontology
  • NRS-C2 Risk assessment method
  • NRS-C8 Evidence, uncertainty and provenance
  • NRS-C9 Risk models, methods and validation

Assessment

  • 50%Method reproductionReproduce one frontier method on open data and state the uncertainty of the result
  • 30%Study reviewA critical review of a 2024 to 2026 study: question, data, method, limits, what it changes
  • 20%Peer reviewReview two other learners' reproductions against a shared checklist

Delivery

  • Self-paced online, with the labs in the browser
  • Cohort study over six to eight weeks, with a weekly lab review
  • Co-delivered with a partner institution, inside its own courses

Partner on this course

  • Co-teach a module and bring a current case from your work
  • Host a cohort for your learners, with your own schedule and review
  • Contribute a lab: a dataset your institution publishes openly, or a model
  • Review the course content and its references before it opens
  • Translate the course and adapt its cases to your region

How institutions and experts take part

In the Academy LMS

Course on the learning platform
Expert, 4 topics
Cohort group
A community group for each cohort of learners
Achievement
Recorded on completion of the assessed work

Open now in this discipline

References

  1. Board of Governors of the Federal Reserve System, Proposed 2026 Stress Test Scenarios, 24 October 2025
  2. European Banking Authority, The EBA publishes the results of its 2025 EU-wide stress test, 1 August 2025
  3. Bank of England, The Bank of England's system-wide exploratory scenario exercise final report, 29 November 2024
  4. Basel Committee on Banking Supervision, Stress testing principles, 2018
  5. Borio, Drehmann and Tsatsaronis, Stress-testing macro stress tests: does it live up to expectations? Journal of Financial Stability, 2014
  6. Acharya, Engle and Pierret, Testing macroprudential stress tests: the risk of regulatory risk weights, Journal of Monetary Economics, 2014
05Take part

Take part in the work

Start from who you are.

06Questions

Questions, answers and key terms

Is the course free?
Yes. Every course and learning material of Risk Academy, led by the Nexus Consortium, is free to study, self-paced or with a cohort. Ordinary participation has no fee; paid work, internships and fellowships are separate arrangements.
What does completing a course give me?
A completion record: the course, its version, the date and what was assessed, private by default and shared by you. It stacks into discipline, department and programme achievements. A record states what was studied and assessed and does not certify competence; it is not a licence, a professional title or an employment status.
Where do the data and the places come from?
Every faculty teaches on a twin of a real place built from open data; each layer carries its provider, licence and date, and every result on the Academy states its source. Maps and figures are indicators for teaching, never an assessment of a place.
How do I take part beyond the course?
Form a competence cell of three to seven people, study a shared pathway, take a supervised assignment in the National Working Groups, or bring a cohort from your institution. For organisations.

Key terms

Term

Scenario

A coherent, plausible description of a possible future used to test plans and exposures.

Term

Stress test

An assessment of how a system or institution performs under severe but plausible conditions.

Term

Reverse stress test

Identifying the scenarios that would cause a system or business to fail.

Term

Plausibility

Whether a scenario could credibly occur given current knowledge.

ReportsContribute

Contribute evidence from this page.

Reports is the Consortium's quarterly publication. What you know about this subject can become evidence, a case or a correction in the next edition, credited to you and published under CC BY 4.0 where it is your own work.

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