01 / THE DETAIL
Keep a common starting point
Use the same opening portfolio, assessment date, units and forecast period for alternatives. Record where costs and capital are allocated. A comparison between different starting books should explain that difference rather than attributing everything to strategy.
02 / THE DETAIL
Make assumptions internally consistent
A downside could change default, recovery timing and funding conditions together. Explain the relationship instead of mixing incompatible assumptions. Retain a base case and identify which inputs are observations, fitted estimates or management choices.
03 / THE DETAIL
Read the result in layers
Start with the business consequence, then inspect the drivers.
- Outcome: contribution, liquidity, capital or concentration.
- Timing: when the effect or constraint appears.
- Attribution: which changed inputs drive the difference.
- Sensitivity: whether plausible variations reverse the conclusion.
04 / THE DETAIL
Avoid false precision
A scenario range is not automatically a confidence interval or a forecast probability. Do not attach a likelihood to a downside simply because it was calculated. Keep statistical uncertainty, parameter sensitivity and management scenarios clearly labelled.
EXAMPLE / PUTTING IT INTO PRACTICE
A faster-growth plan and a base plan are compared on the same opening book. The team first examines funding gaps by period, then checks whether slower recoveries change the preferred pace of origination.
WHAT YOU TAKE FORWARD