Sometimes, it is too risky to rely on a single forecast. This can be the case in long-term planning, as the confidence interval around a forecast widens. Also, plans may depend on factors, such as technological or political, that evolve discontinuously.
One approach to planning in the face of uncertainty is to construct scenarios. Peter Schwartz, the author of "The Art of the Long View", describes scenarios as follows.
In a scenario process, managers invent and then consider, in depth, several varied stories of equally varied plausible futures. The stories are carefully researched, full of relevant detail, oriented towards real-life decisions, and designed to bring forward surprises and unexpected leaps of understanding. Together, the scenarios comprise a tool for ordering one's perceptions. The point is not to "pick one preferred future," and hope that it comes to pass (or, even, work to create it - though there are some situations where acting to create a better future is a useful function of scenarios). Nor is the point to find the most probable future and adapt to it or "bet the company on it. Rather, the point is to make strategic decisions that will be sound for all plausible futures. No matter what future takes place, you are more likely to be ready for it -and influential in it - if you have thought seriously about scenarios.
Stephen A. DeLurgio in "Forecasting Principles and Applications" takes a slightly different perspective.
The purpose of scenario analysis is to anticipate and influence future events so as to plan more effectively.
By generating alternative scenarios, management has a better chance of choosing the right course of action under uncertainty as well as a better chance of reacting to unlikely events that were identified in the scenario.
The first step is to study the decisions that the company has to make and ensure that the focus remains relevant throughout. Then the key factors influencing those decisions should be identified, along with the macro-environmental driving forces (such as demographics, politics, and technology) of those factors. Analysis of the driving forces to determine the most influential and most uncertain provides the framework for selecting scenarios. Then the scenarios are written and their implications for decision making are distilled.