Which of the following describes the risk of a self-fulfilling prophecy in scenario planning?

Prepare for the CIMA Strategic Management (E3) Exam with comprehensive flashcards and multiple-choice questions. Each question offers hints and explanations to ensure you are ready for your test!

Multiple Choice

Which of the following describes the risk of a self-fulfilling prophecy in scenario planning?

Explanation:
In scenario planning, you’re exploring possible futures to prepare responses. A key risk is that the scenarios themselves can drive decisions in ways that make the scenario come true simply because people act on the expectation. This is a self-fulfilling prophecy: the forecast influences behavior, and those behaviors push the system toward the forecasted outcome. If stakeholders treat a scenario as likely, they may change investments, policies, or operations in ways that bring that future about, so the scenario manifests. Other options miss this dynamic. Saying many scenarios may not occur focuses on probability rather than the influence of belief on action. Describing it as costly and inaccurate addresses downsides generally, not the prophecy mechanism. Noting that it encourages communication highlights a benefit rather than a risk.

In scenario planning, you’re exploring possible futures to prepare responses. A key risk is that the scenarios themselves can drive decisions in ways that make the scenario come true simply because people act on the expectation. This is a self-fulfilling prophecy: the forecast influences behavior, and those behaviors push the system toward the forecasted outcome. If stakeholders treat a scenario as likely, they may change investments, policies, or operations in ways that bring that future about, so the scenario manifests.

Other options miss this dynamic. Saying many scenarios may not occur focuses on probability rather than the influence of belief on action. Describing it as costly and inaccurate addresses downsides generally, not the prophecy mechanism. Noting that it encourages communication highlights a benefit rather than a risk.

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