Typical pitfalls of scenario analysis are:

  • Undue suggestion of objectivity and completeness: a presentation of e.g. 4 different does not mean that there are only 4 possible ways for the future to develop
  • Quantitative scenarios might suggest numerical exactness and suggest more certainty about the future than we have
  • Analysts and users often forget that outcomes are often based on models which themselves contain assumptions on the future already
  • Scenarios often reflect more our present expectations and beliefs then future developments, and therefore have a tendency to be rather conservative.
  • Scenarios do not forecast what will happen in the future, rather they indicate what might happen under certain well-specified conditions (what-if). Typically scenarios are used in situations where there is lack of information on underlying mechanisms and developments, and therefore it is usually impossible to adhere probabilities to scenarios. Statements on the likelihood of scenarios therefore should be considered with due care.
  • Presenting an uneven number of scenarios may lead users to assume that the middle scenario is the most probable scenario