Which risk management technique evaluates how an organisation would perform under extreme but plausible adverse scenarios?

Which risk management technique evaluates how an organisation would perform under extreme but plausible adverse scenarios?

• A. Scenario Analysis
• B. Disaster Recovery
• C. Stress Testing
• D. Business Continuity Planning

Answer: (C)

The main idea is to test resilience by evaluating how the organisation would perform under extreme, yet plausible, adverse conditions. Stress testing specifically challenges the organisation to see if its systems, processes, and controls hold up when pushed beyond normal operating conditions. It reveals capacity limits, potential points of failure, and whether response plans and resources (people, technology, finances) are sufficient, helping to strengthen risk controls and contingency planning. Scenario analysis looks at a range of possible futures to understand potential impacts, but it doesn’t necessarily push the organisation to operate under the most severe stress. Disaster recovery focuses on restoring IT systems after an incident, not on overall performance under extreme stress. Business continuity planning aims to keep critical operations running during disruptions, but again, it isn’t solely about evaluating performance under the harshest adverse scenarios.

The main idea is to test resilience by evaluating how the organisation would perform under extreme, yet plausible, adverse conditions. Stress testing specifically challenges the organisation to see if its systems, processes, and controls hold up when pushed beyond normal operating conditions. It reveals capacity limits, potential points of failure, and whether response plans and resources (people, technology, finances) are sufficient, helping to strengthen risk controls and contingency planning.

Scenario analysis looks at a range of possible futures to understand potential impacts, but it doesn’t necessarily push the organisation to operate under the most severe stress. Disaster recovery focuses on restoring IT systems after an incident, not on overall performance under extreme stress. Business continuity planning aims to keep critical operations running during disruptions, but again, it isn’t solely about evaluating performance under the harshest adverse scenarios.