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News and thoughts. Read at your own risk!

Trump as potus and baseline-only thinking

9/11/2016

 
As you and your friends and colleagues digest the election news, are you thinking alternative scenarios of what the Trump victory *might* mean for the U.S., for you, for your company, for the world? Or are you merely thinking of what it *most likely will* mean, and adjusting your single, baseline scenario based on the most persuasive random information coming your way? 

Most executives I know presumed Trump wouldn't win. Nevertheless, optimal risk management or management-under-uncertainty should have made all of us develop and continually adjust multiple possible scenarios. Not many did.  If you didn't have multiple election outcome scenarios 2 months ago, did the narrowing of the odds in the past few weeks prompt you start thinking in that direction? Did you take any anticipatory actions to prepare for whichever scenario was not your expected or preferred one? 

More importantly, are you getting away from baseline-only thinking now? There are multiple dimensions against which to tease apart what will happen going forward, for instance:
  • To what extent are Trump's written/stated policies broadly descriptive of his real priorities?
  • To what extent will he break free of entrenched interests in the current political system, vs will he just be beholden to different ones?
  • Specifically, will he do A or B on topic X or Y relevant to your specific situation (e.g. trade policy, immigration policy, health care, ...)?
  • What will be the implications of a Trump presidency on geopolitical stability, and its casacding impacts?
  • What will be the longer term impacts on "political tone" in the U.S. and the world, given also demographic dynamics?
I just got off a call with a smart and sophisticated company that wanted advice on how to combine these different perspectives into a coherent set of scenarios. I was delighted to help, but suspect a lot of companies, groups, individuals would benefit from considering *any* such perspective, and thinking in any structured way about a *range of scenarios*, rather than trying to predict -- on very limited information we now have -- exactly what *will* happen.​

    Martin Pergler

    Principal, Balanced Risk Strategies, Ltd..

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