Scenario planning vs Forecasting
Scenario planning refers to understanding and
visualizing future situations or events and the probability of an event's
occurrence based on past occurrences. Scenario planning takes into consideration
the current events to understand its implication in the future. Scenario
planning focuses on developing "multiple views of the future. It explores
the interaction of external conditions that may create vastly different
futures. It separates predictable trends from unknowable uncertainties and then
plays out their possible interactions using a limited number of scenarios"
(Steil & Gibbons-Carr, 2005). Scenario planning applies a method to
project future events developments relying on the past and current research (Forman,
Nicol, & Nicol, 2015).
Forecasting involves the use of present and historical data
and applies a forecasting method. Forecasting is relying on probabilities of occurrences
of an event. Forecasting is an estimation of a variable of interest.
Forecasting has the element of time/data that accompanies the variable of
interest to be predicted. Forecasting does not offer solutions for "every
kind of uncertainty" (Egrioglu et al., 2015).
Unlike forecasting, which depends on quantitative data,
an integral aspect of scenario planning involves both quantitive and qualitative
data. An approach is followed when assessing the impacts of observations made
from these data sources. Forecasting uses statistical approaches to predict the
probabilities of events from happening.
Since forecasting excludes events that are not
recognized in predicting future occurrences that are not quantified in numbers,
it is inflexible to consider future events or situations. Therefore, forecasting
is limited to include new occurrences or events from being considered in
building a forecasting model.
To narrow this limitation, which is associated with
forecasting methods such as Auto-Regressive Integrated Moving Average
(ARIMA), Facebook came up with a Facebook the Prophet forecasting model. A key
argument the Prophet forecasting model takes is "events" in the
model. Hence, one can include events that the model that can be considered in
forecasting.
References
Egrioglu, E., Khashei, M., Cagdas, H. A., Burhan
Turksen, I., & Yolcu, U. (2015). Advanced time series forecasting methods. Mathematical Problems in Engineering, 2015 doi:http://dx.doi.org.proxy.cecybrary.com/10.1155/2015/918045
Forman, D., Nicol, P., & Nicol, P. (2015). Looking
to the future: Framing the implementation of interprofessional education and
practice with scenario planning. Education for Health, 28(3), 162-168.
doi:http://dx.doi.org.proxy.cecybrary.com/10.4103/1357-6283.178608
Steil, G.,Jr, & Gibbons-Carr, M. (2005). Large
group scenario planning: Scenario planning with the whole system in the room. The Journal of Applied Behavioral Science, 41(1), 15-29.
doi:http://dx.doi.org.proxy.cecybrary.com/10.1177/0021886304272888
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