Grade Assumptions by Evidence
Classify forecast assumptions by evidence strength and decide which ones need scenario treatment.
Principle: Forecast risk hides where impact is high and evidence is thin. Evidence Grade Use three labels: fact, evidence-based forecast, and unproven assumption. Facts can still be wrong, but they have documentation. Forecasts have observable history or leading indicators. Unproven assumptions need tests. Impact Grade Do not spend equal time on every input. Rank assumptions by how much they move cash, revenue, margin, or covenant headroom. A small weak input can wait; a major weak input needs a scenario. Rolling Discipline Each forecast cycle should retire some uncertainty. If the same assumption remains unsupported, escalate the evidence gap rather than…
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