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Scenario Analysis
11
Transcript
BWRR 3033 RISK MANAGEMENT (A191)
PROF. MADYA DR. LIM CHEE CHEE
SCENARIO ANALYSIS -
CHEF AZMAN WESTERN CORNER
C25 DEVANASON GANESAN
C27 GOMATHI MUNIANDY
C32 HAARINI MANNI VATTIYAN
C42 HAARTY RAJADORAI
C49 SHANMUGA PRIYAH RAJANDRAN
What is Scenario Analysis ?
INTRODUCTION
♠ Sohail, 2019 -
- Thinking about the future
- identify potential problems
- increasing preparedness
- taking necessary precautions to eliminate / reduce them
♠ Balaman, 2019 -
- Forecasting the expected value of a performance indicator
- given a time period
- different situations
Issues with Scenario Analysis
Success of scenario analysis is unpredictable
Requires continuous improvement
Cognitive Bias
Types of Scenario Analysis
- Best-case scenario
- Worst-case scenario
- Base-case scenario
- Multiple-case scenario
Why Scenario Analysis used as
risk identification tool ?
Topic
- Computing different reinvestment rates for expected returns that are reinvested within the investment horizon.
- Examine the impact of catastrophic or so called “tail event” on an organisation’s financial position and/or operational position .
- Businesses can use analyse the potential financial outcomes of certain decisions.
- Evaluate the financial and non-financial impact of extreme, unexpected but plausible, large loss events
Topic
EXAMPLE:
Chef Azman’s Western Corner
SCENARIO ANALYSIS
Income statement of Chef Azman Western Corner on 22 October 2019:
Excel
https://www.exceldemy.com/do-scenario-analysis-excel/
Scenario Analysis
ADVANTAGE
DISADVANTAGE
ADVANTAGE & DISADVANTAGE
- Time consuming in different level
- Difficult in forecasting the hazard
- Future Plan
- Proactive
- Staying away from hazard and dissapoinment
CONCLUSION
Topic
Scenarios analysis will not provide all the answers, but the scenario will help executives ask better questions and prepare for the unexpected situations. That makes them a very valuable tool indeed
APPENDIX
Topic
Topic
THANK YOU
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