ChatGPT Prompts for Risk Analysis: Stress Test Any Financial Decision
ChatGPT prompts for financial risk analysis. Portfolio stress tests, downside scenarios, Monte Carlo frameworks, and risk-adjusted return calculations.
The Prompt
Act as a risk manager at a hedge fund who stress tests portfolios and financial decisions for institutional investors.
Conduct a risk analysis for:
Decision type: {portfolio construction / single investment / business financial decision / personal financial decision}
Details of the decision: {describe the specific decision and its financial parameters}
Existing financial context: {total portfolio value, liquidity needs, income, obligations}
Time horizon: {how long the position or decision will be held or in effect}
Risk tolerance: {low / medium / high — and any hard constraints}
Worst case you can tolerate: {maximum acceptable loss in % or $}
Risk analysis output:
1. Risk identification (5 specific risks — categorized: market / liquidity / execution / concentration / tail risk)
2. Probability-weighted scenario analysis:
- Bull case (probability + outcome)
- Base case (probability + outcome)
- Bear case (probability + outcome)
- Tail risk case (low probability, high severity)
3. Correlation check (does this decision increase correlation with existing exposures?)
4. Liquidity risk assessment (can you exit quickly if needed? At what cost?)
5. Maximum drawdown estimate (worst peak-to-trough loss for this decision)
6. Risk-adjusted return metrics:
- Expected value calculation (probability-weighted return)
- Reward-to-risk ratio
7. Risk mitigation options (3 specific ways to reduce risk while preserving upside)
Constraints:
- Not financial advice — for educational analysis only
- Probability estimates must sum to approximately 100%
- Tail risk scenario must be genuinely extreme — not just a 'mild bear case'
- Risk mitigation must be actionable — hedging strategies must be specific instruments or approaches
Variables to fill in
-
{decision details}Specific financial decision and its parameters -
{financial context}Total portfolio, liquidity needs, income, obligations -
{worst case tolerance}Maximum acceptable loss in % or dollars -
{time horizon}How long this decision will be in effect
How to use this prompt
- Run this before any financial decision that could affect more than 5% of your net worth
- Use the probability-weighted expected value to compare two alternative decisions side by side
- Share the tail risk scenario with a financial advisor — these are the conversations advisors often avoid
- Use the risk mitigation options to negotiate better terms or add downside protection
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Expected value is the only rational basis for financial decisions
A decision that has a 70% chance of returning +20% and a 30% chance of losing 15% has a positive expected value: (0.7 × 20%) + (0.3 × -15%) = +9.5%. Decisions made on expected value — not emotion, not narrative, not anchoring to past prices — compound into better outcomes over time. The probability-weighted scenario analysis in this prompt forces this calculation.
Tail risk is the risk that ruins everything else
A portfolio that earns 15% annually for 9 years and then loses 60% in year 10 ends up with less than if it had earned 8% annually for 10 years. Tail risk events — market crashes, regulatory actions, counterparty failures — are rare but devastating. The prompt’s tail risk scenario forces you to consider and size for these events before they happen.
Liquidity risk is invisible until it isn’t
An investment that would show a 50% gain on paper means nothing if you can’t exit when you need the cash. Illiquid positions — private placements, locked DeFi positions, concentrated stock positions — carry liquidity risk that doesn’t appear in return calculations. The liquidity risk assessment forces you to answer ‘how quickly can I get out, and at what cost?’ before you’re in a position that requires an immediate answer.
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