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Mr. Alberto Behar and Sandile Hlatshwayo
This note explains the value of strategic foresight and provides implementation advice based on the IMF’s experience with scenario planning and policy gaming. Section II provides an overview of strategic foresight and some of its tools. Scenario planning and policy gaming have been the Fund’s main foresight techniques so far, though other tools have been complementary. Accordingly, section III focuses on the scenario planning by illustrating applications before detailing the methods we have been using, while section IV describes policy gaming including the matrix policy gaming approach with which we have experimented so far. Section V summarizes the key points. In so doing, the note extends an invitation to those in the economics and finance fields (e.g., researchers, policymakers) to incorporate strategic foresight in their analysis and decision making.
Mr. Alberto Behar and Sandile Hlatshwayo

. Strategic foresight is an important addition to the IMF’s risk-preparedness framework and there is room for economists in the IMF and elsewhere to use such tools more, potentially also in country work. Foresight is an organizational competence that should be continually developed through training and practice. Acronyms and Abbreviations CFM capital flow measures CSR Comprehensive Surveillance Review NDU National Defense University OECD Organisation for Economic Co-operation and Development SME subject- or country-matter expert

International Monetary Fund. Strategy, Policy, & Review Department

predictive densities directly, they can still inform the assessment of tail risks (notwithstanding communication challenges in presenting high-impact low-probability risks discussed above). 19. Strategic foresight tools are an important addition to the Fund risk preparedness framework and there is room to use them more in surveillance. Strategic foresight uses a range of methods to scan the future for ‘unknown unknowns’. Techniques used at the Fund include megatrends analysis, variations of scenario planning exercises, and policy gaming (see Annex II for more details

Mr. Alberto Behar and Sandile Hlatshwayo

, established capacity is key to meeting heightened demand for foresight. Foresight can inform and improve the work of IMF staff and the broader economics profession (see Online Annex 9 for a comparison of foresight methods). Best practice is for strategic foresight to be an iterative process, with senior managers and a core of users seeing increasing returns through repeated exercises. Strategic foresight tools are an important addition to the IMF risk preparedness framework and there is room to use them more in surveillance and in lending (for example, as a tool to help

International Monetary Fund. Strategy, Policy, & Review Department
The coverage of risks has become more systematic since the Global Financial Crisis (GFC): staff reports now regularly identify major risks and provide an assessment of their likelihood and economic impact, summarized in Risk Assessment Matrices (RAM). But still limited attention is paid to the range of possible outcomes. Also, risk identification is useful only so much as to inform policy design to preemptively respond to relevant risks and/or better prepare for them. In this regard, policy recommendations in surveillance could be richer in considering various risk management approaches. To this end, progress is needed on two dimensions: • Increasing emphasis on the range of potential outcomes to improve policy design. • Encouraging more proactive policy advice on how to manage risks. Efforts should continue to leverage internal and external resources to support risk analysis and advice in surveillance.