What is the purpose of scenario planning in risk management?

• A. To explore multiple plausible futures and prepare responses to uncertainty.
• B. To forecast exact outcomes.
• C. To assign blame for risk events.
• D. To perform post-mortem analysis.

Answer: (A)

Scenario planning is about preparing for uncertainty by imagining several plausible futures and figuring out how to respond under each one. It isn’t about predicting a single exact outcome; it’s about exploring how different drivers—like market shifts, regulatory changes, or supply chain disruptions—could combine to create varied conditions. By thinking through these possibilities, you can build flexible, robust strategies, identify early warning indicators, and plan contingencies that work across a range of outcomes. This approach strengthens resilience and guides proactive decisions rather than relying on a single forecast or trying to assign blame or look backward after events.