Hi fellow searchers,

While studying CSI I stumbled across their scenario modelling approach when evaluating investment prospects:

"We use a weighted four-scenario approach to assess investment prospects. Academics call this mutually exclusive collectively exhaustive scenario modelling or “MECE”. The cash flows of each of the four scenarios are probability weighted, allowing us to use a single hurdle rate across all investment prospects, even if the investments have very different risk profiles."

Does anyone know more about this particular approach? How does it differ from a basic base-case/bull-case/bear-case?

Looking forward to great discussions on modelling!

Cheers, Tobias