Asset Managers Sharply Increase Stress-Testing Spend to Identify Hidden Risk Exposure, New Global Research From Clearwater Analytics Reveals
(MENAFN- Perceptiona) BOISE, Idaho, NEW YORK, CHICAGO, LONDON and HONG KONG, October 15, 2026 – Almost nine out of 10 (88%) of 250 senior executives at fund managers across the U.S., Europe and the Asia-Pacific region have increased expenditure on stress testing funds in the past year as they respond to challenging market conditions, a comprehensive global study, "The Crowded Trade", commissioned by Clearwater Analytics reveals.
The perfect storm of rising interest rates, restricted market liquidity and geopolitical instability are increasing the risk of sudden and disorderly market dislocations, particularly during periods of heightened volatility.
When asked how they will try to reduce the risk of severe “left-tail” portfolio losses over the next 12 months, just under half (49%) of asset managers surveyed say they will employ enhanced quantitative risk modelling or stress testing to identify where they are exposed to market risk.
Asset managers also face growing concern that traditional diversification strategies may offer less protection during extreme market events as correlations between asset classes rise under stress conditions.
In response, more than half (54%) of asset managers say they will increase their focus on defensive stocks with less sensitivity to market moves and strong balance sheets, which historically suffer less severe drawdowns.
Further, 56% of asset managers say they will put protective puts in place, which means buying options on major indices such as the S&P 500, which guarantee a payout if the market falls below a certain strike price.
More than a third (34%) of survey respondents say they will use volatility products such as buying call options or futures on the CBOE Volatility Index, which gain value as equities fall, to mitigate severe losses.
Just under a quarter (22%) of research participants will allocate to tail risk funds in the next 12 months, and 16% will invest in real assets, which are widely considered to be safe havens.
Kirat Singh, President of Risk and Alternative Assets at Clearwater Analytics, said: “Traditional risk assumptions are being challenged by a combination of higher volatility, reduced dealer balance sheet capacity and greater geopolitical uncertainty. It is no surprise that asset managers are turning to stress testing and scenario modelling because they want faster access to accurate, consolidated investment data to better evaluate how portfolios may behave during left-tail events and make more informed risk management decisions.”
The full findings of the "The Crowded Trade" study are available at
About Clearwater Analytics
Clearwater Analytics is the natively agentic investment management platform built on a single, continuously reconciled investment record. Portfolio management, trading, accounting, risk, compliance, and private markets workflows run on a single source of truth, creating a connected foundation for automation, AI-driven insights, and agentic workflows across the investment process. Clearwater supports more than $10 trillion in assets globally for insurers, asset managers, hedge funds, banks, corporations, and governments. Learn more at
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The perfect storm of rising interest rates, restricted market liquidity and geopolitical instability are increasing the risk of sudden and disorderly market dislocations, particularly during periods of heightened volatility.
When asked how they will try to reduce the risk of severe “left-tail” portfolio losses over the next 12 months, just under half (49%) of asset managers surveyed say they will employ enhanced quantitative risk modelling or stress testing to identify where they are exposed to market risk.
Asset managers also face growing concern that traditional diversification strategies may offer less protection during extreme market events as correlations between asset classes rise under stress conditions.
In response, more than half (54%) of asset managers say they will increase their focus on defensive stocks with less sensitivity to market moves and strong balance sheets, which historically suffer less severe drawdowns.
Further, 56% of asset managers say they will put protective puts in place, which means buying options on major indices such as the S&P 500, which guarantee a payout if the market falls below a certain strike price.
More than a third (34%) of survey respondents say they will use volatility products such as buying call options or futures on the CBOE Volatility Index, which gain value as equities fall, to mitigate severe losses.
Just under a quarter (22%) of research participants will allocate to tail risk funds in the next 12 months, and 16% will invest in real assets, which are widely considered to be safe havens.
Kirat Singh, President of Risk and Alternative Assets at Clearwater Analytics, said: “Traditional risk assumptions are being challenged by a combination of higher volatility, reduced dealer balance sheet capacity and greater geopolitical uncertainty. It is no surprise that asset managers are turning to stress testing and scenario modelling because they want faster access to accurate, consolidated investment data to better evaluate how portfolios may behave during left-tail events and make more informed risk management decisions.”
The full findings of the "The Crowded Trade" study are available at
About Clearwater Analytics
Clearwater Analytics is the natively agentic investment management platform built on a single, continuously reconciled investment record. Portfolio management, trading, accounting, risk, compliance, and private markets workflows run on a single source of truth, creating a connected foundation for automation, AI-driven insights, and agentic workflows across the investment process. Clearwater supports more than $10 trillion in assets globally for insurers, asset managers, hedge funds, banks, corporations, and governments. Learn more at
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