Scenario Planning: Stress Testing Your Bankroll

## Beyond Expected Value Bankroll management that only considers expected value and standard variance is incomplete. Rare but real scenarios — model failure, major market shift, simultaneous bad variance across correlated markets — require specific planning. ## The Three Stress Test Scenarios **Scenario 1: Extended variance (the unlucky run)** Your edge is real but variance delivers a 30-unit losing run. How does your bankroll and staking respond? What is the psychological and financial impact? Pre-calculation: If you stake 1.5% and experience 30 consecutive losses (each loses 1 unit), total loss = 30 × 1.5% of initial bankroll. At £2,000 bankroll: 30 × £30 (approximately, given proportional staking) ≈ £780 loss. Bankroll drops to ~£1,220. Remaining operational capacity: 61% of initial. Can you continue? Yes, if stop-loss is set at 50%. **Scenario 2: Edge erosion (the model fails)** Your CLV drops to zero or negative over 6 months. When do you notice? What is your trigger to stop? How much do you lose before stopping? Pre-calculation: If CLV erodes to 0% from 3%, and you are betting 1.5% per bet with 300 bets remaining before your next review: expected additional loss = 300 × stake × 0% = £0 (breakeven). But if edge goes negative (−2%), loss = 300 × stake × 0.02 = meaningful. Monthly reviews prevent this from accumulating. **Scenario 3: Market access restriction cascade** Your top 3 bookmakers restrict your account simultaneously. Your betting capacity drops by 40%. How do you continue operating? Pre-planning: always maintain 3+ untouched fallback accounts. Never deploy full capacity to a single bookmaker. ## Running the Stress Tests Annually Before each season: write out responses to each scenario in your bankroll plan. The written plan is your decision-making guide when the scenario occurs — not an ad hoc response under pressure.