Athlone Insights
Expert Insights on Forecasting:
What You Need to Know in 2025
numbers in focus
Forecasting plays a vital role in helping you prepare for various possibilities. Today we share from Dr. Aswath Damodaran, professor of finance at New York University's Stern School of Business and expert in valuation and corporate finance.
"In today's volatile business environment, accurate forecasting can be the difference between thriving and merely surviving," says Dr. Damodaran. Here's what you need to know:
Embrace Data-Driven Decision Making
According to Dr. Damodaran, successful forecasting relies heavily on data analytics.
"Businesses must leverage big data and AI-driven predictive models to enhance forecast accuracy," he advises. This approach allows for more nuanced predictions that account for complex market dynamics.
Scenario Planning is Key
Dr. Damodaran stresses the importance of scenario planning. "Don't just forecast one future," he says. "Develop multiple scenarios to prepare for various potential outcomes."
This strategy helps businesses remain agile and responsive to changing market conditions.
Integrate Both Short-term and Long-term Forecasts
"Effective forecasting balances short-term operational needs with long-term strategic goals," Dr. Damodaran explains.
He recommends creating interconnected forecasts that span different time horizons to ensure comprehensive business planning.
Consider Non-Financial Metrics
Dr. Damodaran points out a growing trend: "Increasingly, businesses are incorporating non-financial metrics into their forecasts."
These might include customer satisfaction scores, employee retention rates, or sustainability indicators, providing a more holistic view of future performance.
Regular Review and Adjustment
"Forecasting is not a 'set it and forget it' process," Dr. Damodaran cautions.
He advises regular reviews and adjustments of forecasts based on new data and changing market conditions.
This ongoing process ensures that forecasts remain relevant and actionable.
The Human Element Remains Crucial
While emphasizing the importance of data and technology, Dr. Damodaran also highlights the irreplaceable role of human judgment.
"AI and machine learning are powerful tools, but they must be guided by human expertise and intuition," he states, "AI is a tool, not a replacement for human expertise".
Athlone Partners are committed to helping our clients navigate the complexities of modern forecasting.
As we move through 2025, mastering this art will position you to seize opportunities and mitigate risks in an ever-changing economic landscape.