Model internal market risk

Trigger: A scheduled risk assessment period, regulatory mandate, or significant shift in macroeconomic conditions initiates the internal market risk modeling.

1. Aggregate portfolio positions and historical market data
2. Identify key market risk factors and parameters
3. Calibrate risk models such as Value at Risk or Expected Shortfall
4. Execute stress testing and scenario analysis
5. Perform backtesting against historical outcomes
6. Deploy the model for ongoing risk calculation

Outcome: A calibrated and validated market risk model is deployed to quantify potential portfolio losses under normal and stressed conditions.