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Identify & Quantify
Macro-Energy-ESG Risk

Why? - Global Uncertainty Needs Smart Scenarios

Manchester Economic Forecasting

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Ubiquitous Global Threats & Opportunites

Global Economy - Multi-Dimensional Uncertainty
International trade entry/expansion can unlock growth potential & productivity and enable demand/supply diversification. But it also brings a higher dimension of risk exposure where uncertainties can be multiplicative rather than just free-standing. These can only be captured effectively by a global (structural) economic/emissions model that can articulate and quantify both the magnitude and longevity of global/national shocks.
The types of global forecast risk that MEF (model-based) scenario analysis can help mitigate include:
  • Macroeconomic - Consumer Demand, Fiscal Tax/Spend, Inflation/Commodity Prices, Currency, Trade Flows/Prices
  • Supply/Geopolitical- economic/business impacts of supply disruptions
  • Energy Use/Emissions - technology breakthroughs and tech-diffusion
  • Carbon Transition - Green taxation, technology shocks, Global Carbon budgets
We assist many different types of firm deal with the anticipation & quantification of Global or Sovereign risks & uncertainties that will impact their domain-level operations across Economics, Globalisation/Trade, Finance, Investment and Energy/Emissions. One such firm is Decision Analysis Services Ltd which MEF have been working with for almost 25 years to assist them to model/quantify various Global, Economic/Policy scenarios eg around Brexit transition, Trump's trade wars - see Client Case Study - DAS
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Scenario Analysis - for Strategic Planning

Model-based Risk Quantification
Using its main, global, macro model mGEM and its various add-on modules for Finance (finGEM) , Industrial Sectors (iGEM) , Energy, "Black Swan" shocks cannot be predicted in advance, prudential scenario analysis would attempt to regularly quantify the impact of a range of contrarian scenarios, to boost preparedness across several business risk axes.
Official forecasts from policy authorities and NGOs for the Economy (eg UK OBR, IMF, OECD) and Energy/Emissions (eg IEA, Paris or the US EIA) often involve key forecast assumptions for "exogenous" driver variables eg Business or Consumer Confidence. Yet such variables - often the key drivers of final forecast trajectories of interest - are often highly uncertain. Its essential therefore to understand the model structure underlying these offiical forecast models in order to identify which key assumptions/variables are to be tested in scenario analysis of official forecasts.
MEF has provided assistance in identifying and quantifying (global) risk across a range of organisations:
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Carbon/Energy Transition Risks

Highlighting Risks in Pathways/Policies to 2050
Energy has returned as a key risk (and opportunity) in the global economy; the Ukraine conflict has arguably increased the urgency of rapid Carbon transition as Energy moves from the Economic/Corporate realm to that of existential National Security. As national Fiscal/Regulatory policy is likely to shift to accelerate Carbon transition, organisations need to be aware of their own transformation trajectories - and ESG/Green Taxation exposure - to both 2030 and 2050.
iGEM allows the feed-through of mGEM global/national shocks to 12 industrial sectors (ISIC Rev. 4) across the majority of the 53 economies/zones covered by mGEM. In turn, enGEM can translate this industrial mix of output trajectories to build up an accurate projection of associated aggregate national GHG emissions to 2050. We can also overlay official Energy use/supply forecasts to 2050 in order to stress-test macroeconomic assumptions underlying these projections. Such scenario analysis can then test/explore alternative projections of both global/national/industrial activity and the associated GHG intensity of that output variation.
Technology has always been the wildcard in any medium-term economic projections, moreso now in the "race" to hit challenging (and expanding) national climate legislative goals & targets for cleaner industrial/power sectors. MEF's global emissions forecasts are the product of (projections of) industrial sector output and associated GHG intensity trends. As the latter are generally judgementally projected trends, they are perfect candidates to test further in "GreenTech scenario analysis to compliment the more traditional macroeconomic sensitivity analysis.