Scenario analysis

Q: What is scenario planning in Indicio, and how does it work?

Scenario planning in Indicio allows organizations to explore multiple potential futures using conditional forecasting techniques to simulate different outcomes.

Q: How do I create, compare, and save different scenarios (best case, worst case, base case)?

Indicio enables users to create, compare, and save different scenarios including best case, worst case, and base case scenarios for comprehensive planning.

Q: How often should I update scenarios, and can they be automated?

Scenarios can be updated as needed and the process can be automated to ensure your forecasts remain current with changing conditions.

What is scenario analysis?

Scenario analysis is a structured way to evaluate how your business might perform under different future conditions. You define a set of assumptions (for example tariffs, pricing, volume, churn, exchange rates, staffing, delivery times), run the impact through your model, and compare results across scenarios. The goal is not to predict exactly what will happen. The goal is to understand what could happen, what would drive it, and what you should do if it does.

Scenario analysis examples and benefits

Common scenario types include:

Best case, expected case, worst case: quick range building for planning and board discussions
Trade policy change: sudden trade policy changes such as tariff increase
Sales to inventory ratio: dealers increasing or decreasing inventory level
Capacity constraints: hiring delays, production limits, lead time changes
Regional or currency shifts: FX swings, regulation changes, market expansion

Benefits you get from doing it well:

Better decisions under uncertainty: you see outcomes before they happen
Faster alignment: teams can agree on assumptions and tradeoffs
Risk visibility: you identify what breaks first and where to buffer
Clear triggers: you define what signals mean “switch plans”
More resilient plans: you build options, not just a single path

Scenario analysis vs forecasting

Forecasting estimates the most likely outcome based on data and trends. Scenario analysis explores multiple plausible outcomes based on “what if” assumptions.
In practice:

Forecasting answers: “What do we think will happen?”
Scenario analysis answers: “If X happens, what does it do to revenue, cost, and capacity, and what should we do next?”

Forecasts are great for tracking performance and setting expectations. Scenarios are great for planning decisions, preparing responses, and understanding sensitivity to key drivers. The strongest planning teams use both.

Scenario analysis with Indicio software

1. Identify key drivers

Start by identifying the key drivers that could influence your organization's future. These might include market trends, technological innovations, regulatory changes, or environmental factors.

By using Indicio's indicator analysis, you get the influence score, based on the latest variable selection methods.

Indicio software showing leading indicators.

2. Develop Scenarios

Create a range of scenarios based on different assumptions of how the key drivers will develop. Each scenario should be plausible and internally consistent, representing a distinct possible future.
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3. Analyze the effect

For each scenario, analyze the potential impacts on your organization using Indio's scenario engine to simulate the effect.

4. Plan and Prepare

Use the insights gained from your analysis to develop strategic plans that are flexible and resilient. Ensure that your organization is prepared to pivot as necessary when the future unfolds.

Frequently asked questions

What is scenario planning in Indicio, and how does it work?

‍Scenario planning in Indicio lets you test “what if” questions on top of your forecasts. You can tweak key drivers like demand, prices or macro factors, run alternative paths such as base, upside and downside, then compare the financial and operational impact across scenarios.

How do I create, compare, and save different scenarios (best case, worst case, base case)?

You start from an existing forecast, define your key assumptions, and then create alternative scenarios like base, upside, and downside. You adjust drivers in each, run them, and compare results side by side. Scenarios can be saved, renamed, and reused for future planning cycles.

Can I link scenarios to external drivers like macroeconomic or market variables?

Yes. You can connect scenarios to external drivers such as macroeconomic indicators, market indices, prices, or other external data. Changing those drivers lets you stress test your forecasts and see how different economic or market paths affect your outcomes.

How are scenario results visualized and shared with stakeholders?

Scenario results are shown with side by side charts and tables so you can compare key metrics across scenarios. You can export results to your BI tools, share links or reports, and use visuals in presentations or management reviews.

How often should I update scenarios, and can they be automated?

Scenarios should be refreshed whenever new data or key assumptions change, typically in line with your planning cycle or major events. You can automate updates so scenarios roll forward with the latest forecasts and driver values, reducing manual work.

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