82. Institutions should ensure that their scenarios assess absolute and relative changes of risk …

Institutions should ensure that their scenarios assess absolute and relative changes of risk factors. In an absolute scenario, the degree of severity should be a direct change of the risk factor and not depend on the current level. In a relative scenario, the degree of severity should depend on the current level and economic situation (e.g. GDP growth decreases by 2%, i.e. a relative change to the absolute level). For example, will a 2% negative relative change in GDP from a starting point with a substantial positive output gap (i.e. current GDP is substantially above the structural GDP) not necessarily lead to a severe stress effect on GDP in absolute/level terms. Likewise, the worse the current economic situation at the outset the more severe the stress of a relative scenario. Institutions should ensure that their choice of the scenario is sufficiently severe in both relative and absolute terms. Both the choice and its impact on the degree of severity should be justified and documented.

1. Forbhreathnú

1.1 Tagairtí

1.2 Ceanglais aitheanta

1.3 Caighdeáin ghaolmhara

2. Ceanglais aitheanta

3. Caighdeáin ghaolmhara

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