1
Clarify your purpose
Decide whether you're stress-testing a strategic decision, a top risk or your wider ERM framework and risk appetite.
2
Set clear objectives
Define what you need from the exercise — for example, identifying vulnerabilities, refining strategy, validating controls or aligning appetite with reality.
Build a cross-functional team
Bring together the leaders who would own decisions in a real event, not just risk specialists — and involve external partners such as brokers, insurers or key vendors where they materially affect the outcome.
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4
Identify critical uncertainties
List the internal and external factors that could shift performance, from leadership changes and policy shifts to economic, geopolitical, regulatory or technological forces (using a PESTLE lens if helpful).
6
Develop a small set of scenarios
Create three or four plausible futures that reflect different combinations of these uncertainties, covering both likely and stretch cases.
5
Explore how trends could evolve
Look at how these drivers might develop over the next two to three years, and what that would mean for your strategy, priorities and risk appetite.
Agree on flexible responses
Identify actions to mitigate key risks and capture opportunities in each scenario and make sure they can adapt as conditions change.
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Test the impact on strategy and controls
For each scenario, assess how your existing strategies, controls and ERM framework would perform, and where gaps, bottlenecks or opportunities appear.
Use AI as a design partner
Draw on it to brainstorm scenario narratives, roles, prompts and timelines, then refine the outputs with your leadership team so they reflect your organization's reality and governance.
Capture owners and follow-up
Assign responsibility, timelines and metrics, and schedule a review so scenarios, assumptions and responses stay current.
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How to run scenario planning in 10 steps
Use this as a quick prompt when you are designing your next scenario planning exercise: