Have you ever paused before making a decision thinking about probable scenarios in your business ?
Scenario analysis, as it can be understood from the word, refers to a technique that provides us with possible outcomes of our decisions. In the business world, this technique is generally used to estimate the value of a portfolio after a certain period subjected to changes, usually unfavorable ones, in the market. Therefore, scenario analysis would be a useful tool for being applied to investment strategy as well as corporate finance. Scenario analysis often relies on computer simulations, so even if it is a useful method for managers or stakeholders, for instance, scenario analysis is just as good as the users’ assumptions and inputs.
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