Scenario Analysis Essay

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1. DEFINITION The word scenario appears in the dictionaries with two main meanings. The first, as reported by the Cambridge Dictionary, is “a written plan of the characters and events in a play or film” so it assumes the sense of plan. For instance, in the context of movie, a scenario is, more precisely, the part of the screenwriting process which precedes the screenplay, so it is a synoptical collage of events or series of actions. In this acceptation, scenarios are used in project and product planning to represent hypothetical sequences of happenings constructed to take into account the causal interrelations. The second definition, which is more recent, is “a description of possible actions or events in the future” (Cambridge University Press, s.d.). Nowadays, this meaning of possible event is the most used in literature: diverse shades of it can be found in almost every field, from computing to finance and business strategy. For instance, in finance scenario analysis is the process to estimate changes in a portfolio’s value based on the occurrence of different situations – the scenarios – in the future such as the change of the interest rate, to elaborate a wiser financial strategy and manage risk. 2. HISTORY The English word scenario …show more content…

In case of indeterminacy and incomplete information about the possible choices, their consequences or even the triggers and correlations among events, the decision-maker is forced to make up as many missing data as possible to guide his choice. That process is the scenario analysis; it explores the scope of the possible, not only the probable, under certain basic assumptions. Scenarios are thus the description of a variety of long-range alternatives leading to different outcomes and all the possible paths that can bring to an

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