Question

The main difference between Value at Risk and Stress Testing is: 1) Value at Risk takes a non-statistical approach, as opposed to Stress Testing. 2) Stress Testing takes a non-statistical approach with its scenarios analysis. 3) Value at Risk is not a quantitative approach. 4) There are no differences between the two approaches.

Answer 1

Hello !

2) Stress Testing takes a non-statistical approach with its scenarios analysis.

Hope It Helps u :)

Answer 2

Answer:

2) Stress Testing takes a non-statistical approach with its scenarios analysis.

Explanation:

Stress testing is a process which involves running simulations under crises for which a model was not inherently designed to adjust. It's aim is to identify hidden vulnerabilities, specifically the ones based off of methodological assumptions. In business strategy and corporate governance several approaches to stress testing are identified, some of the most common ones are stylized scenarios, hypotheticals, historical scenarios.