Scenario Analysis
Scenario analysis is where physical and transition modelling meet. The value comes from disciplined design and honest reporting, not from the number of scenarios run.
Designing the scenario set
A workable set covers an orderly transition, a disorderly transition, and a hot-house outcome, each with defined horizons and clear narrative anchors before any numbers are produced.
- Reference pathways and calibration vintage
- Short, medium, and long horizon alignment
- Downscaling to portfolio geography and sector
- Sensitivity testing on the most load-bearing assumptions
Reporting for decisions
Board reporting should show the direction, magnitude, and confidence of each result, plus the assumptions that would change the conclusion if they moved.