What is the role of scenario governance in maintaining credible sustainability risk assessments?

• A. It eliminates the need for data.
• B. It ensures all forecasts are perfect.
• C. Scenario governance role: It defines who creates, reviews, and approves scenarios, ensures transparency, consistency, and updates, and prevents overreliance on a single forecast.
• D. It has no role in risk assessment.

Answer: (C)

Scenario governance provides the structure and controls for how scenarios are created, reviewed, and updated in sustainability risk assessments. It assigns who is responsible for developing scenarios, who reviews them, and who approves them, making the process transparent and auditable. By enforcing consistent methods and updating scenarios as new data and insights emerge, governance prevents overreliance on a single forecast and ensures the assessment considers a range of plausible futures. This credibility is crucial because stakeholders need a repeatable, transparent approach to understand risks under different conditions—climate impacts, policy changes, or market shifts. Without governance, scenarios can become ad hoc or inconsistent, which undermines trust in the risk results.