Demand falls 15 percent
A soft year in the market you sell into.
Stress tests
What this company survives
A bank has to prove it survives a bad year before it is allowed a good one. This is the same battery for a company: fourteen shocks that happen to real businesses, each run against the twin doing nothing on the same seeds, scored on the hit to profit, the cash floor and how many runs end out of money. One resilience figure, the weakest point named, and every shock openable as a scenario.
Build a twinHow a scenario runs
The battery adds nothing to the engine. It asks the same question fourteen times and keeps the answers side by side.
The battery
Fourteen shocks, in five groups
The largest customer leaves
Concentration, made real, in month two.
Supplier costs rise 15 percent
Input inflation you cannot pass on at once.
A competitor cuts price 10 percent
The rival moves first and the price sensitive accounts notice.
Interest rates rise 3 points
Every borrowed dollar costs more. Left out of the score when there is no debt.
Cost inflation at 8 percent
Wages, rent and inputs move together, every month.
A key person leaves
The one whose name is on the important relationships.
The labour market moves 12 percent
Keeping people costs more and hiring takes longer.
Credit tightens
Customers pay slower and lenders ask harder questions.
Customers pay 30 days later
Nothing changes on the profit line and cash still runs short.
Freight rises 25 percent
Left out of the score when freight is not a cost here.
A public setback
A bad review cycle, a recall, a story that travels.
The exchange rate moves 10 percent against you
Imported inputs or exported sales, whichever side you are on.
A recession
Demand, credit and inflation together, because that is how they arrive.
The score
How a shock is graded
Each shock is measured against the same company doing nothing over the same months on the same seeds, so the difference is the shock and not the noise. Two things are measured: the hit to operating profit over the window, and the hit to the cash floor, both as a share of a year's revenue. A hit worth fifteen percent of annual revenue is the top of the damage scale.
The score for a shock is one hundred, less sixty times the damage, less forty times the share of runs that ended out of money. Eighty five and above absorbs, sixty bruises, thirty five hurts, and below that breaks. Resilience is the mean across the shocks that could act; a rate rise on a company with no debt is left out rather than counted as a pass.
Every run of the battery is kept, so the figure gets a history: run it after each upload and watch it move as the ledger fills in.
- Damage: the larger of the profit hit and the cash floor hit, over fifteen percent of revenue
- Insolvency: the share of replications that end with negative cash
- Score: 100 minus 60 times damage minus 40 times insolvency
What you get
Four things on the screen
The dial
Resilience out of a hundred, with the plain sentences under it: how many shocks are absorbed, how many break the company, which one is the weakest, and what share of the ledger this rests on.
The weakest point, drawn
Cash month by month under the worst shock against doing nothing, with the worst tenth dashed, and what the agents did while it happened.
Every shock, worst first
Grade, score, profit hit, cash floor, share of runs out of money and the worst month, for all fourteen.
Open as a scenario
Any shock becomes an ordinary scenario with one click, so you can change its size, add your response to it, and run it against the others.
A stress test on a twin standing mostly on industry defaults is a stress test of the industry, not of you. The screen says what share of the ledger came from your own record when the battery ran, and the path on What to upload names the files that would change that.