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 environment where risk drivers – rates and liquidity dynamics, credit-deterioration pockets, cyber threats, geopolitical fragmentation, global regulatory change and shifting customer behaviors – compound all at once.”
A Deloitte global survey last year indicated demand at senior levels: 71% of board members and C-suite executives saw “strategic risk oversight” and “scenario planning” as areas in which “board oversight can help boost resilience the most.”
“In a world where the pace of change is relentless, we believe that the ability to plan for multiple plausible futures is a strategic imperative,” BDO declared in its 2023 Techtonic States report. The firm outlined a “Four Worlds” alternative-scenario framework taking into account the “intersection of technological innovation, corporate megatrends, societal shifts and the geopolitical landscape.” The scenarios were built on two axes: technological progress, and the evolution of markets and business models.
The global C-suite leaders surveyed for that report and asked to look ahead to 2026 largely envisioned a “World Accelerated” by tech and aligned business networks. That contrasted with another of the scenarios, a “World Sustained” of gradual, continued evolution.
BDO’s 2025 Techtonic States survey highlighted a shift: “Looking ahead to 2028, 52% of leaders anticipate a World Fragmented, defined by deeply fragmented markets and supply chains; a third foresee a World Divided, with East-West bifurcation; and only 8% see a World Accelerated.”
BDO cited “geopolitical shocks and economic headwinds” as having “dramatically reshaped the business landscape.”
Technology and resilience are top-of-mind themes across the surveys. For 52% of Deloitte’s respondents, “rapid technological advancements and digital disruption” was the No. 1 priority.
BDO in 2025 referenced that the “pace of innovation hasn’t slowed – it’s sped up, often at a dizzying rate.” Although the “tools available to businesses today are more powerful than ever,” many organizations “are struggling to translate this potential into meaningful outcomes;” hence a reason why 61% of leaders rated resilience as “the most important quality of a business.”
Protiviti’s Brian Kostek
To Protiviti’s Kostek, “It’s fair to say we’re in a more uncharted period because technology is reshaping the core operating model of financial services.”
“AI and automation aren’t just productivity tools,” he goes on. “They introduce new risk types – model risk, data risk, third-party concentration, conduct and fairness risk – while simultaneously changing expectations for speed, personalization and cost-to-serve. The net effect is that leaders can’t rely on a single forecast; they need scenario capability that supports faster decisions with clearer tradeoffs.”
However, only 26% of directors in a 2026 Protiviti-BoardProspects survey discuss AI at every board meeting,
For all their growing sophistication, scenarios and associated models will face future tests akin to past crises when then-existing risk frameworks fell short.
“Sometimes the data lets us down to where you can’t use the model anymore, and you have to use judgment and experience to try and come up with these scenarios,” remarks Clifford Rossi, professor-of-the-practice and executive-in-residence at the University of Maryland’s Robert H. Smith School of Business and director of the Smith Enterprise Risk Consortium. “You have to have the what-ifs in your playbook.”
A March 2025 SERC Risk Academy program in part provided a “what-if” practice run for mostly mid-career risk professionals from financial services, pharmaceuticals, insurance and aerospace. They were placed in mixed teams and tasked with “identifying, measuring and mitigating major risks” stemming from a simulated catastrophic situation. Rossi and other seasoned risk professionals served as their mentors.
Participants furthered situational awareness by combining and applying their different industry perspectives.
In “How to Make Scenario Planning Stick,” an MIT Sloan Management Review article, Paul J.H. Schoemaker and Shardul S. Phadnis stated that “the key to success is to support scenario work with complementary practices, such as employing adaptive strategies, monitoring external change and fostering a learning culture.
“These requisite organizational capabilities – augmented by agile management, savvy decision-making based on real-time information, and farsighted leadership – serve as crucial connective tissue for integrating scenario planning into business operations. When well connected, these elements become integral pillars of state-of-the-art strategic management in turbulent times.”
Board-level communication is also key.
In Deloitte’s survey, 73% said their boards had “stepped up their level of activity and involvement, particularly around strategy development and scenario planning.” Sixty-six percent cited “open, transparent communication between the board and C-suite as the No. 1 leadership factor impacting their organization’s level of resilience.”
Kostek suggests setting a cultural tone from the top of: “We value early escalation, we make time for the hard conversations, and we act before the story hits the headlines.”
“Boards don’t need more dashboards,” he contends. “They need better decisions under uncertainty. For financial institutions, multi-scenario planning should be treated as a governance muscle, not a once-a-year exercise.”
“The CRO is shifting from ‘risk reporter’ to ‘resilience architect,’” Kostek observes. “That means risk can’t sit on the sidelines. It needs to be embedded into business-decision forums where tradeoffs are made – credit appetite, liquidity buffers, operations design, concentration management, third-party dependencies and technology investments.”
BDO’s Opal believes organizations need to treat uncertainty “not as a problem to solve but as a new normal to navigate indefinitely.”
It’s about preparation, not perfection.
“All bases are never completely covered,” Rossi cautions. “Anybody who says they are is fooling themselves.”
L.A. Winokur is a veteran business journalist based in the San Francisco Bay Area.