From the course: AI in Financial Forecasting
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Introduction to generative AI in forecasting
From the course: AI in Financial Forecasting
Introduction to generative AI in forecasting
- [Instructor] Forecasting is never about predicting the future with certainty, it's about preparing for multiple possibilities. This is where scenario analysis comes in. Instead of relying on a single projection, scenario analysis explores different potential outcomes based on key variables. It helps businesses prepare for uncertainty, anticipate risks, and identify opportunities. Let's look at why scenario analysis matters and how AI can enhance its accuracy and deficiency. Every financial decision carries uncertainty. Scenario analysis helps businesses plan for best, worst, and base cases, a structured way to prepare for a range of possibilities; mitigate risk, identifying vulnerabilities before they become crises; and support strategic decision-making. Scenario analysis insights help executives make informed choices under uncertainty. For example, if a company relies on imports, how will fluctuating exchange rates impact profitability? By modeling multiple scenarios, finance teams…
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