Boards that approve group capital adequacy without stress-testing capital fungibility under combined-entity scenarios are approving a capital position that may not survive the first multi-jurisdiction stress event. One well-designed scenario that models simultaneous capital demands across entities reveals fungibility gaps that standalone analysis misses.
A board-level stress test that quantifies the capital, earnings, and retro-cost impact of exit-decision latency across the portfolio reveals risks that standard risk-appetite reporting conceals.