Enterprise Risk Management, 2nd Edition

CHAPTER 15Scenario Planning as an Enrichment of Enterprise Risk Management

 

HENK KRIJNEN

Managing Partner, Navincerta

 

PURPOSE, SCOPE, AND PRACTICE OF SCENARIO PLANNING

What Is in a Word?

In this chapter the term scenario means an alternative possible future of the business or policy environment. A set of scenarios is used to explore significant contextual uncertainties that are relevant for an organization. Like many other terms, the word scenario will have different meanings to different people. It comes from a word in the ancient Greek theater context: Σκηνη (skene), which means stage. In the performing arts a scenario is a synoptic collage of an event or a series of actions and events. In this context there is usually only one scenario: the one that the script writer or dramatist has selected. In daily life, the word scenario similarly could describe a sequence of actions and events, often with choices involved: if I follow scenario A, I could end up with situation X; if I follow scenario B, the result could be Y.

In business and policy making, the word can be used in a similar way. A “scenario” could describe what actions an organization can take and what the implications will be. The organization is an actor in such a scenario. It has some influence on the result even though the organization may not be able to fully determine the outcome because of uncertainties along the way. Yet another way the word scenario is used is to refer to different outcomes of some variable. ...