Scenario analysis examines how different plausible future conditions could affect risk exposure, strategic objectives, or financial performance. Unlike simple sensitivity analysis, scenarios combine multiple variable changes to create coherent narratives about possible futures. Climate risk scenario analysis, for instance, might model business impacts under 1.5°C, 2°C, and 3°C warming pathways over 30 years. This forward-looking approach helps boards and executives stress-test strategies against uncertainty and identify early warning indicators. Regulatory frameworks increasingly mandate scenario analysis for climate, cyber, and financial risks.