Effective stress-testing is both an art and a science. It is not only about knowing which variables to shock and by how much, but also about finding a suitable historical precedent for the calibration of pricing factor correlations. No single stress test is likely to provide all the answers an investor may be looking for, and it can be necessary to assign probability weightings to potential outcomes, to look for parallels in historical periods and even to test unprecedented scenarios. In this presentation, Dr Bernd Schmid, talks about stress-testing best practices, drawing from extensive research at Axioma. As a co-speaker, Christoph Schon, CFA, CIPM, will present a concrete stress testing case study illustrating the topic from a very practical point of view.