Eighth Economic Defence Course digged into the topic of risk

November 12, 2022

Scenario-based strategy work can be done from two different perspectives: preparing for different future scenarios or steering the operating environment towards the desired future. There is often scope for such influence, however, which means that a strategy which focuses purely on preparedness is sub-optimal. Typical strategy measures aimed at shaping the operating environment include regulatory intervention, the development of radical innovations, and company acquisitions. ‘In my own research, I have developed decision-analytical methods that help towards simultaneously taking into account both the preparedness perspective and efforts to shape the operating environment. These methods help to identify the ways a company can deal with different future scenarios while also steering the company’s development in the desired direction,’ Eeva Vilkkumaa explains.

Scenario-based strategy work can be done from two different perspectives: preparing for different future scenarios or steering the operating environment towards the desired future. The preparedness approach is particularly needed when there are limited opportunities for influencing the future. There is often scope for such influence, however, which means that a strategy which focuses purely on preparedness is sub-optimal. Typical strategy measures aimed at shaping the operating environment include regulatory intervention, the development of radical innovations, and company acquisitions. A strategy based purely on shaping the operating environment, on the other hand, is a risky undertaking, as the future may well turn out to be completely different from what was hoped.

‘In my own research, I have developed decision-analytical methods that help towards simultaneously taking into account both the preparedness perspective and efforts to shape the operating environment. These methods help to identify the ways a company can deal with different future scenarios while also steering the company’s development in the desired direction,’ Eeva Vilkkumaa explains.

Dangerous talk about harmless debt

In his presentation, Professor Matti Keloharju raised the question of whether we are living in a ‘new age’ in which the traditional laws of economics no longer apply. He wondered why this tale of a new era is being told, even though history shows that there is no basis for it.

‘There are many examples from history of similar pronouncements of a new era – which later proved to be wrong. Among other examples, the famous American economist Irwing Fisher predicted that stock prices had permanently risen to a higher level – just days before the huge stock market crash of 1929.’

The source of this news is from Aalto University

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