Scenario analysis can help a company to
A) understand the degree of uncertainty that a different set of project-affecting circumstances may hold.
B) eliminate all of the uncertainty that a different set of project-affecting circumstances may hold.
C) transform a risky project into a risk-free project.
D) none of the above.

Question

Quizplus · Accepted Answer

Scenario analysis can assist a company in evaluating various possible scenarios and the likelihood of them occurring, allowing them to anticipate and plan for potential outcomes. It assists in comprehending the degree of uncertainty associated with various project-affecting circumstances, but it does not entirely remove them. By identifying and developing plans to manage such uncertainties, scenario analysis can help a company mitigate risk and prepare for the impact of external factors. However, it cannot completely eliminate all uncertainties, nor can it make a risky project risk-free. Overall, scenario analysis is a valuable tool for assisting firms in making informed decisions in the face of uncertainty.

Scenario Analysis Can Help a Company to