In scenario analyses that incorporate ESG-related issues, which of the following approaches to strategic asset...

In scenario analysis, dynamic asset allocation offers themost flexibilitybecause it allows investors tocontinuously rebalancetheir portfolios based on changing ESG-related factors. Unlike total portfolio analysis—which tends to be static—or regime-switching models—which primarily identify broad shifts—dynamic asset allocation continuouslyadapts to evolving risks and opportunities. This flexibility enables investors to bettercapture potential winners(sectors or companies benefiting from ESG trends) and avoidpotential losers(those exposed to ESG-related risks).