Our IFRS 9 service includes up to six economic scenarios and their associated probabilities. It is specifically designed to meet the requirements of the International Financial Reporting Standard 9 and covers 85 countries.
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Oxford Economics offers a solution that specifically addresses the requirements of new accountancy standards, namely to provide an unbiased view of the forward-looking distribution and associated probabilities for the macroeconomic outlook.
Exploiting our forecast track record, the high level of data granularity covered in our models, the in-depth analysis of our 250 in-house country economists, and the world’s leading globally integrated macro model, Oxford Economics produces robust forward-looking distributions for the key drivers of impairment in 80 countries in line with local and global risks.
Our service includes two upsides and three downsides scenarios around our baseline to help you access local and global risk. The scenarios span the probability distribution of forecasts and cover the expected lifetime of assets.
Scenario outputs for all 85 countries included on the Global Economic Model covering the key drivers of impairment: property prices, financial asset prices, income gearing, interest and FX rates.
Our comprehensive reports explicitly detail changes from the last set of scenarios based on our analysis of current trends and risks, informed by proprietary global surveys of around 200 leading companies and external benchmarks.
Scenarios are updated quarterly to reflect changes to the base case and emerging risk.
We provide full client support to answer questions about our data and forecasts. In addition, a broad library of presentations and webinars are accessible.
The methodology used to construct these forward looking distributions is similar to that used by the European Central Bank and Bank of England when assessing the risks around their central projections.
Based on these robust distributions we derive coherent economic scenarios along with their probability. Crucially, our approach ensures that the only changes to scenarios from quarter to quarter are due to a transparent assessment of emerging or receding risks utilising external benchmarks and proprietary surveys on the nature and severity of risks to the economy.
At the centre of our approach is our renowned Global Economic Model, which integrates individual country models through global assumptions about trade volume and prices, competitiveness, interest and exchange rates, capital flows and commodity prices.
The model’s unique open-architecture framework enables us to assess the impacts of adverse scenarios on economic indicators and a range of asset classes. The model’s flexible software allows variables to be added to meet our clients’ needs when assessing the impact of multiple economic scenarios on portfolios.
The Global Economic Model has been used by banks for stress tests published by a large number of the authorities around the world, including the Federal Reserve Bank, the European Banking Authority, the UK Prudential Regulation Authority, the Australian Prudential Regulation Authority, the Hong Kong Monetary Authority and the Monetary Authority of Singapore.
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