Forecasting is preparing for the future. A company will analyze the past and present to make informed judgments of the future, what potential difficulties they may encounter, and how those will affect specific operations.
This can be useful for all kinds of futures* where risk is involved:
- Budget planning
- Shifts in markets and industry trends
- Even world events!
- (*Forecasting may also reveal a 40% chance of rain. This is considered a side effect and should only be concerning if outlandish predictions start coming true.)
There exist multiple types of forecasting, and while you should turn to your expert analysis on the subject, two of the most common types are Judgment Forecasting and Qualitative Forecasting.
- Qualitative Forecasting focuses on the use of expert analysis instead of analysis focused on data and computer algorithms.
- Judgment Forecasting is when a company must make a decision based on its best judgment, as there needs to be more valuable data or information available for the matter at hand.