Scenario planning is a strategic planning tool that helps you account for the uncertainty of future conditions while developing your business strategy. Evaluating multiple factors involved in a range of future possibilities will help you better understand uncertainties and key areas of vulnerability.
From there, scenario planning allows you to develop hypothetical situations - not forecasts or predictions - to illustrate how shifting markets, the availability of commodities and technologies, climate change, and other significant impact factors may affect your business. Incorporating these hypotheticals into your risk management and decision-making processes can generate considerable value, for you and for your investors.
What are the benefits of scenario planning?
Evaluating the current landscape and coming trends in order to see and account for risks and opportunities is a vital part of effective planning. A transparent business strategy incorporating scenario planning allows investors, insurance underwriters, internal staff, other stakeholders, and the public to understand not only that you are aware of determinants that will affect the future of your business—such as climate risks, greenhouse gases, and other ESG factors—but that you are prepared for them.
Scenario planning also helps you understand how climate-related scenarios will affect your business specifically in terms of your specific sector, region, or asset class. A more risk-aware vision of your future also allows you to plan management options, innovate, collaborate, and differentiate yourself from other companies, developing a competitive edge.
How do you get started with scenario planning? How does it factor into your sustainability or environmental disclosure, and what types of factors should you consider? If you are interested in learning more about scenario planning, check out our on-demand webinar, which explores topics such as:
- Preparing for a sector-based approach
- Analyzing and understanding risks and opportunities
- The basics of scenario analysis and how to approach scenario planning
- A roadmap for scenario planning
Want to learn more? Watch our webinar on-demand, where experts from ADEC Innovations and the Climate Disclosure Standards Board (CDSB) discuss and explain scenario planning and the Task Force for Climate-related Disclosure (TCFD).