Scenario planning

Working through several coherent, plausible futures and deciding how the business would respond to each. Base, upside, and downside cases can inform different operating and investment decisions.

Scenario planning in practice

Hypothetical: a manufacturer considers a base case with stable demand and input costs, a favorable case with easing input costs, and an adverse case with a supplier disruption. For each, management considers production, pricing, inventory, and financing responses. These are possible futures, not a report of events that happened.

Sensitivity analysis · Underwriting case · Key-person risk · All of the glossary