My former colleagues at McKinsey have just published an article on stress-testing for nonfinancial companies. Unsurprisingly, I very much agree with them. Whether the goal is stress-testing (a specific risk-management centred viewpoint) or strategic planning, companies need to think more in scenarios to effectively get their arms around the uncertainty they need to navigate.
I've written about this on these blog pages and in an article planned for a Canadian mainline business publication (where it ultimately ended up on the cutting room floor after internal conflict in the editorial board in which I was collateral damage) in the context of the election of Mr Trump as president. Ultimately, stress testing, scenario planning, and risk management live in the same ecosystem, just in different ecological niches. Ideally they work together, and which one is a priority to exercise for a given company, or provides the best path towards a more holistic approach, depends on the circumstances. Comments are closed.
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Martin PerglerPrincipal, Balanced Risk Strategies, Ltd.. Archives
February 2023
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