Scenario Planning in a Nutshell and its Role in Risk Management in Banking

Abstract

The distinctions between qualitative (see this Part II) and quantitative (see Part I above) approaches have been sharply etched and, as underscored by Forrester (1975: 48) or Rapoport (1953), somewhat exaggerated. Yet, “the proper impression emerges – the ‘art’ of the former is still better able to deal with decisions of great consequence than the ‘science’ of the latter” (Forrester, 1975: 48). The anthropomorphic desiderata of good and effective (risk management) decisions, resilience, and flexibility (Brose et al., 2014a: 369; Helbing, 2013; Detken & Nymand-Andersen, 2013; Sheffi, 2005) become more important than preciseness, efficiency and optimization under conditions of volatility, uncertainty, complexity, and ambiguity that characterize our world, a so-named “VUCA world” (Bennett & Lemoine, 2014; Kleindorfer, 2010: 185; see Chapter 6 for a deeper analysis of complex systems).