Scenario thinking is an ideal tool for pension funds to identify risks. It is key, though, that the scenarios be used frequently.
Financial market developments are completely unpredictable. Scenario thinking will help you identify real risks and tailor your investment strategy to what is actually happening.
ALM emphasises quantitative results, but lacks any qualitative storylines. You need these storylines to flesh out scenarios and to help you understand what may happen. This is paramount when it comes to preparing for an uncertain future.