The Return of Scenario Thinking
Global markets in 2025 continue to operate under conditions of persistent volatility.
Uncertainty in trade, energy, geopolitics and technological adoption has challenged the
reliability of traditional forecasting tools. In this context, scenario forecasting is remerging as a strategic discipline for governments, financial institutions and
corporations.
Recent analyses highlight the limits of point forecasts in this environment. The Financial
Times notes that economic projections have repeatedly missed turning points due to
structural breaks and non-linear shocks. (Financial Times, Why forecasters keep getting
the global economy wrong, 2024). Similarly, the IMF acknowledges that forecasting
errors have widened since 2020 due to unprecedented shocks and persistent policy
uncertainty. (IMF World Economic Outlook, 2024)
The question is shifting from predicting the future to preparing for it.
Why Scenario Forecasting Matters Now
1.A Higher Frequency of Shocks
Geopolitical conflict, climate instability and supply-chain disruptions now intersect more
frequently, producing “cascading risk environments” where linear models perform
poorly. (WEF Global Risks Report, 2025)
2.Structural Breaks in Economic Patterns
Pandemic effects, demographic shifts and trade fragmentation have weakened
historical correlations that most forecasting models rely on.
3.Data Complexity and AI Limitations
While AI enhances pattern detection, its output is only as reliable as the assumptions
behind it. McKinsey notes that AI assisted forecasts degrade when exposed to new regimes not present in training data, making scenario methods essential to interpret
model uncertainty. (McKinsey Global Institute, The Future of Forecasting, 2024)
Scenario forecasting provides a structured way to incorporate uncertainty rather than
treat it as an anomaly.
How Scenario Forecasting Works
Scenario design does not claim to know the future, but It defines multiple plausible
futures, quantifies drivers of change and tests organisational resilience under each
pathway.
Typical scenario dimensions include:
● Interest rate and inflation trajectories
● Trade and supply chain realignment
● Geopolitical escalation
● Climate related disruptions
● Technological adoption curves
● Regulatory tightening or deregulation
The approach enables clearer decision boundaries, contingency planning and early
warning indicators.
Benefits and Limitations
Benefits
● Resilience over precision. Helps organisations prepare for a range of outcomes
rather than rely on a single projection.
● Decision clarity. Identifies which strategies hold under most conditions.
● Early warning signals. Converts uncertainty into a set of monitored indicators.
● Organisational alignment. Encourages cross functional interpretation of risks and
assumptions.
Limitations
● Not a predictive tool. Scenarios map possibilities, not probabilities.
● Dependent on expertise.
● Requires governance. Without disciplined review and monitoring, scenarios
become static rather than adaptive.
As the IMF cautions, uncertainty cannot be eliminated, but its impact can be managed
through structured frameworks and transparent assumptions. (IMF WEO, 2024)
Is Scenario Forecasting a Way to Outsmart Uncertainty?
Scenario forecasting does not eliminate uncertainty, but it reduces its destabilising
impact. It transforms ambiguity into structured insight and strengthens the
organisation’s ability to adapt when conditions shift unexpectedly.
How TAMVER CONSULTING Helps
TAMVER CONSULTING integrates scenario forecasting into decision architectures that
support corporate and public-sector resilience.
Our work focuses on three principles:
1.Scenario Architecture: Structured design of macro, regulatory and operational
futures, built with defensible assumptions and transparent logic.
2.Stress testing and Impact Modelling: Quantification of revenue, cost, supply
chain and capital exposure implications across multiple pathways.
3.Decision Governance: Implementation of early warning indicators, review cycles
and escalation protocols that maintain organisational readiness.
Key References
● Financial Times: Why forecasters keep getting the global economy wrong (2024)
● IMF: World Economic Outlook (2024)
● OECD: Economic Outlook (2024)
● WEF: Global Risks Report (2025)
● McKinsey Global Institute: The Future of Forecasting (2024)
