scenariomodelling

Scenariomodelling is a methodological approach for exploring possible futures by constructing and analysing alternative scenarios through formal models and narrative storylines. It combines quantitative modelling with qualitative assessment to illuminate how different drivers may interact under uncertainty. The term is commonly used in business, government, and research, and is sometimes written as scenario modelling or scenario analysis.

Unlike point forecasts, scenariomodelling does not seek to predict a single outcome. Instead, it outlines a set of plausible futures and evaluates potential implications for strategies, policies, or systems.

Core activities include identifying drivers such as macroeconomic trends, technology, demographics, policy, climate, and markets; developing scenarios through narratives or parameter envelopes; selecting or building models (system dynamics, econometric, energy or climate models, agent-based simulations); running simulations; and analysing results through sensitivity tests and indicator-based assessment.

Applications span strategic planning, risk management, climate and energy planning, urban and transportation planning, supply chain resilience, and financial risk assessment.

The typical process comprises framing the objective, designing drivers and scenarios, calibrating models, interpreting outputs, communicating insights, and updating assumptions as new information becomes available.

Limitations and challenges include inherent uncertainty, potential biases in driver selection, model structure limitations, data quality, and the risk of scenario fatigue or proliferation. Best practices emphasize transparent documentation, peer review, stakeholder involvement, and robust validation.

See also: scenario planning, forecasting, systems thinking, model validation.