In last week's article, I suggested that multiple "but
for" scenarios of economic loss are likely in situations where
an intervening event occurs. The need for multiple scenarios is
driven, largely, by the degree of uncertainty inherent in the
forecasting exercise. In this article, I outline how uncertainty
can be managed through scenario modelling. As lawyers reading this
article, there may be some value in thinking about the potential
implications this may have on case management, including the scope
of instructions, defining the question(s) to be solved, and the
nature of, and access to, the information required to support the
claim.
Scenario analysis recognises that there is no single picture of
the future, but rather, a range of possible outcomes. While each
economic loss claim is different, Exhibit 1 summarises some of the
steps that I typically incorporate into my approach for building
predictive financial models. As I take a contingency approach to
modelling
