In 1981, I was fortunate enough to spend a week with Pierre Wack at a Shell Group Planning retreat in Runnymede, England. Talking about scenarios, he told me: If you do standard “scenario” forecasting, you wind up with a graph with three lines labeled “high,” “medium,” and “low.” Everyone looks at it and believes that they have paid attention to the uncertainty. Then, of course, they plan on “medium”! But they are missing the risk. The risk is not that the price of oil may be high or may be low. The risk is that it will go high, suckering you into a major investment, and then turn and dive to
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