Purpose of Stress Testing in Portfolio Management

In the context of portfolio management, stress testing is a crucial technique used to understand how a portfolio would perform under extreme market conditions. This technique helps in identifying vulnerabilities and ensuring that risk is managed effectively. Consider a portfolio manager who is analyzing the potential impact of various financial crises on their portfolio. They decide to conduct a stress test based on historical market downturns.

Which of the following is a primary purpose of conducting a stress test on a portfolio?