Introduction
Investment managers today find themselves navigating markets that are more unpredictable and fast-moving than ever before. Geopolitical upheavals, shifting trade policies, and economic surprises have become the new normal, yet many investment strategies still cling to an outdated measure of success: beating an index. The problem? This benchmark-first mindset often ignores the sheer complexity and volatility that define our world, leaving portfolios vulnerable to the unexpected.

Take geopolitical tensions, for instance. An unexpected change in leadership or policy can shake markets overnight, disrupting entire sectors. In such a rapidly shifting environment, relying on index outperformance alone leaves portfolios dangerously unprepared for the unpredictable.

The real challenge: Adapting to complex risks
So, what is holding investment managers back from adopting more proactive strategies? One major challenge lies in how risk is addressed. Traditional benchmarking assumes a level of market stability that no longer exists, leaving portfolios exposed to risks that could be better managed with a more forward-looking approach. Even when some managers do recognise the need for advanced risk management, they often lack the right tools to execute effectively.

Basic tools simply cannot handle the speed and data complexity required to anticipate and respond to market shocks. For instance, the upcoming U.S. election could yield vastly different market outcomes depending on the victor: pro-business policies boosting small-cap stocks in one case, or tighter regulations reshaping sectors in another. Addressing these possibilities demands robust, real-time analysis tools that go far beyond the capabilities of a simple spreadsheet.

How dynamic scenario planning reduces portfolio risk
Forward-thinking investment managers recognise that merely outperforming an index is insufficient for managing modern investment portfolio risks effectively. Today’s markets require investment managers to run dynamic “what-if” scenarios to simulate the potential impacts of different global events. By understanding how various scenarios—from election outcomes to shifts in global supply chains—can influence markets, they can better prepare for potential shocks.

To do this effectively, investment managers need advanced tools that can process real-time data and model complex market scenarios with precision. This allows them not only to react swiftly but also to act with confidence, having already anticipated potential outcomes and developed informed strategies. Without these capabilities, outdated, labor-intensive methods leave them unprepared to navigate sudden market shifts effectively.

ImpaQt analytics: Stress testing and scenario planning solution for investment managers
At swissQuant, we provide investment managers with ImpaQt Analytics, a powerful platform designed for dynamic stress testing and scenario planning. Built on an award-winning risk engine, ImpaQt Analytics allows users to simulate a variety of market conditions, helping them test and adapt their portfolios against multiple scenarios in real time.

With ImpaQt Analytics, investment managers can:

• Build dynamic scenarios to anticipate how markets will respond to geopolitical, economic, and sector-specific developments.
• Simulate the impact of events like the U.S. election, which could see tax cuts under a Trump victory or regulatory tightening under a Harris administration.
• Run stress tests on global events like de-escalation or deterioration of tensions in the Eurozone, allowing for better-prepared portfolios.

Historical vs. Hypothetical stress-testing
ImpaQt Analytics enables investment managers to assess the impact of both real-world and custom-built scenarios on their portfolios. The platform includes pre-built historical scenarios aligned with real market events, such as the 2008 financial crisis and the dot-com bubble, allowing managers to observe how past shocks would have influenced their investments. Additionally, ImpaQt Analytics supports dynamic, hypothetical scenarios, enabling managers to craft potential future events and immediately evaluate their portfolio’s resilience in various market conditions.

From market research to actionable investment strategies
While we equip investment managers with tools to run dynamic scenarios, the real power lies in their ability to turn their own research and insights into actionable strategies. ImpaQt Analytics does not replace thoughtful analysis—it enhances it. By allowing investment managers to stress-test their market hypotheses in a matter of clicks, they can transform insights into confident, data-driven decisions.

Key benefits of using ImpaQt analytics for stress testing and scenario planning

• Dynamic scenario testing: Simulate portfolio responses to global crises, elections, and economic shifts, arming your strategies with data-driven foresight. 

• Real-time risk tracking: Continuously monitor critical risk metrics, empowering proactive decision-making when market shifts occur. 

• Unified, efficient platform: Simplify complex processes and manage diverse assets seamlessly within a single, intuitive system.

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