Investigating situation of business society and economic environment at a long-term viewpoint, it assumes variable futures. This methodology is recognized effectiveness for social/economic risk.

The portfolio will be changed in response to profit, cash flow, business environment changes in the same way of a corporate management.

Making decision and effective selection in available choices looking at generated assumption world by scenario as possible as many directions.

It is a different process of prediction which assumes the future on an extension line of the past. If a structured change happens, it is possible to cope with new situation grasping changes at several viewpoints. This process does not assume the future on the extension line of the past, it shows two processes, generating an assumption world, then making a strategy by using it.

The strategy considering by the investigation result of the behavior of assumption and business model.

It provides how to deal with uncertainty and how to grasp the uncertainty that is different “prediction”.

The issue of “how to grasp uncertain events” has a method to deal with uncertainty applying for stochastic model statistical modelingThis is a methodology managing risk by use of a stochastic model like VaR that introduces a section modeling in detail. Describing another clause, VaR effectiveness is down in some phase of the market structure. Volatility and randomness cannot apply for the market situation that is out of range by risk management of VaR method.

This strategic planning method is effective the situation even if that cannot apply for the risk management method by a stochastic model.

This planning methodology provides opportunities to considering/investigating the structure of the business environment, the process reveals the structured uncertainty.

Investigating whether the business model is effective or not in created assumption world, it will appear whether the business leads success or not in response to changes.If the business model is effective for any scenarios, make a strategy to strengthen the model. Unless decides the model is effective, it needs to consider new business framework.

Our strategy is generating the portfolio in response to future structured changes that are not on the extension line of the past.

Scenario analysis and stress test

A stress test is a part of scenario analysis.Using scenario alter the expected situation in the market environment. The viewpoint is the value of the portfolio in case of an extreme situation of risk factors.

Some framework is suggested as a methodology based on the scenario.

Our company improves the portfolio focusing on the portfolio behavior and its value changes on a basis of the scenario.

The risk of the portfolio is examined the maximum value of expected portfolio loss under all scenarios.

risk factor(scenario) 　X＝{X1,..Xn}weigh vector W =(W1,…Wn)are constant.

loss factor related to the portfolio of a securityl[t] The risk of the portfolio

Followings are risk factors and volatilities using scenario that compose library of factors that accumulates profit and loss of the portfolio.

• Covariance matrix
• Risk factors and volatilities