Use of scenarios in strategic and political risk analyses

Franc Milburn (Consultant and Journalist. He can be reached at fmilburn@migamerica.org)

Handbook of Business Strategy

ISSN: 1077-5730

Publication date: 1 December 2005

Abstract

Over the next 10 to 15 years, the international system (and corporations) will have to adjust to changing power relationships in key regions. These have the potential to provide discontinuities greater in impact than the end of the Cold War. Numerous crises have already surprised economists, ratings agencies, governments and strategic planners alike. Use of scenario analysis is particularly useful in circumstances where it is necessary to take a long‐term view of strategy, and where there is a high level of uncertainty about external influences. One of the principal problems however, is that not enough attention is paid to potential political risk discontinuities with the organization deprived of critical intelligence about the external environment. Building in the flexibility to strategic thinking to understand the possibilities and risks offered by a range of futures is the key to success, if the modern corporate is to be in the best possible state of preparedness for the years ahead. A China case study demonstrates that opposite scenarios for the future are equally plausible, while the history of hegemonic predictions is deeply flawed. Part of the problem being that decision making, whether in the State or strategy department may not be “rational.” The Saudi Arabia case study offers scenarios with global implications. There is no crystal ball that enables analysts to predict future aspects of international relations with certainty, but the aim of scenario analysis is not to be occasionally right about the future, as never to be wrong.

Keywords

Citation

Milburn, F. (2005), "Use of scenarios in strategic and political risk analyses", Handbook of Business Strategy, Vol. 6 No. 1, pp. 25-30. https://doi.org/10.1108/08944310510556919

Download as .RIS

Publisher

:

Emerald Group Publishing Limited

Copyright © 2005, Emerald Group Publishing Limited

Please note you might not have access to this content

You may be able to access this content by login via Shibboleth, Open Athens or with your Emerald account.
If you would like to contact us about accessing this content, click the button and fill out the form.
To rent this content from Deepdyve, please click the button.