Meeting the Moment with Multi-Scenario Planning

For risk managers, a world wracked by uncertainty and polycrisis drives the point home: Crystal-ball guesswork is not their business, and neither is old-school, unidimensional scenario planning.

Amid the complexity and “nonlinear dynamics” of interconnected markets and threats, “the challenge is not simply to envision extreme events, but to uncover how risks interact, amplify, and cascade across the financial system,” Straterix CEO and GARP featured columnist Alla Gil wrote recently.

“The priority is not predicting triggers but understanding how risks combine and propagate,” added Gil, whose advocacy of multi-scenario planning and stress testing is increasingly resonating.

“Once the backbone of risk management, traditional single-scenario planning is no longer sufficient in an environment of accelerating change,” BDO USA principal Ric Opal wrote in Risk Management Magazine.

“Uncertainty isn’t episodic anymore, it’s structural,” comments Brian Kostek, managing director and Global CRO/CCO Solutions leader at Protiviti. Driving the multi-scenario trend “is the reality that banks and financial institutions are operating in an...