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Stress testing incorporating causal dependency [29]

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Bullet points include: Some blend between top down and bottom up likely to be desirable Top down scenarios likely to be more credible if they paint a convincing ‘story’, i.e. have built in causality aspects Incorporate bottom up perspective by: Proposing several possible causal linkage structures chosen to be most relevant to specific vulnerabilities within portfolio The ‘story’ may also help decision-makers weigh up alternative strategies

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