Stress test

This paper is based on a stress test conducted by an institution to see if it could survive a certain pandemic. We used three financial models to test the impact of a pandemic on the business continuity of the institution and its financial health.

Key assumptions

We made several assumptions to simplify the models tested. The key assumption? That there were two ‘zones’ where the pandemic could occur. Zones could be groups of cities or groups of countries, and the organization has a presence in both zones.

In the first of the models we assumed that the pandemic occurred in both zones at the same time. In the other two models, we assumed that the pandemic in the second zone occurs six or twelve time units after the first. The organization has a cross-zone back-up plan — where one zone is unable to work at full capacity it can call on available spare capacity in the other zone.