Strategic Scenario Analysis for Economic Security: Enhancing Corporate Resilience through Tabletop Exercises (TTXs)

Unlocking creativity through games for effective risk forecasting

Conducting strategic scenario analysis for economic security is the process of imagining alternative futures that allow us to understand risks and opportunities related to economic activity. While businesses, which make up the vast majority of economic activity in free societies like Japan and the United States, are the lifeblood of our well-being, they are also at risk in a new era of strategic competition.

I have spent the last 20 years as a professor and soldier, fighting in three wars and writing five books in the process. My focus has been related to supporting governments, major businesses, and international organizations in solving complex problems defined by rapid change and high levels of uncertainty. Geopolitics, economics, and technological change create a degree of complexity that often makes it difficult to make stable predictions about future business practices. While most of my background has been related to war, international security, and peacebuilding, the insights gained from thinking about geopolitical risk and changes in the international system are also especially important for major businesses in order to be aware of cascading risks that could affect them. Which methods help to understand very uncertain systems?

In business, forecasting is relatively straightforward in cases of systems with low uncertainty. We understand the error terms. We can look at whether we should use a straight-line extrapolation or analyze trend lines to actually make a prediction. But the more uncertain the system, the harder it is to make those predictions. Becoming a child again and being playful is probably the most astute form of analysis professionals can do in such cases. The greater the uncertainty in the system, the more playfulness the analyst must adopt to see the degrees of freedom and the possibility of change.

The interconnected global economy demands a particular type of more astute analysis, and the degree of predictability found in the Cold War era is not applicable anymore. In particular, Japan is stuck in the middle of the major political competitions that define our world—whether it involves the challenge of North Korea, Russia, or shifting politics in China. All of those affect import and export markets, and in particular, key resources Japan relies upon to maintain its economic position. Japanese businesses and the government need to find a way to understand how this world of great power competition creates a particular category of economic and business risk. Since there is a high degree of uncertainty, creativity is necessary.

In my experience, that creativity is best captured through a mix of tabletop exercises (games) that allow participants to create alternative future scenarios, and telling those stories collectively as an analytical team beginning to make risk assessments more effective. Living in a world that is pivoting towards higher risks of conflict, including economic coercion and cyber campaigns, requires maintaining constant attention on interactions and feedback loops, action, reaction and counteraction in order to make effective plans. Traditional forecasting techniques are not sufficient anymore—we must open our minds to different categories of analysis. Participating in games is a more effective strategy for planning in this environment.

Why do we analyze possibilities that emerge from games and how can games be used to make political or business decisions? And how can games that are specifically oriented towards questions involving economic security be efficiently designed?

Effects of TTX: identifying risks and opportunities by making interesting decisions

Why do we game? Games help visualize and describe complex interactions. Complex systems are subject to emergent properties, or small changes that cascade. Those cascading effects in the system are usually a result of how a collection of individuals makes decisions based on calculating risks, opportunities, and the related costs. Games help us describe tendencies and potential in the making of our world.

Sid Meier, a famous game designer, was quoted as saying about the essence of games that “all games come down to a series of interesting decisions.” This means that game design must capture the key decisions that players will make. Every game that I have built to understand complexity is based on this concept of trying to understand who the players are and what interesting decisions they must make.

In 2023, I was asked to design a game exercise in Florida for the congressional members of the U.S. to help them understand the risks of a possible conflict over Taiwan. All of the major committees were represented and played their respective roles. The series of interesting decisions modeled focused on what political decisions a U.S. politician, in particular the President, could make if China actually tried to use military force to threaten Taiwan, and how those would produce both a loss of life and economic costs. Decisions based on methods of communicating with the adversary and one’s own society produced a series of options. Even though this game was very short, months of preparation work had to be done to model over 200 distinct possible outcomes.

A game should lend itself to wide degrees of variation, capturing plausible scenarios that reflect the risks at hand. In a business context, that might involve a question of supplier risk or market disruptions that link to major exogenous shocks, or even a domestic shock such as an earthquake. Games allow participants to imagine a wider range of possible outcomes. But games don’t only help visualize complexity. The purpose of that visualization is to allow players to assess risks and opportunities. Games are a safe space for senior leaders to think about the inherent trade-offs in the type of decisions they are about to make.

One example is the U.S. Cyberspace Solarium Commission—a prominent congressional commission in 2019 and 2020 that led to over 80 pieces of legislation and the creation of the National Cyber Directorate in the United States government. Elected officials from both parties, the CEO of one of the largest electric companies in the United States, and representatives from major interest groups played games to imagine cyber risks. Another example is assisting the U.S. government and companies in thinking about how generative AI will change their world. This encompasses imagining AI risks inherent in national security, including nuclear escalation risks, and analyzing how we can use AI to think about the way strategic competition impacts businesses. Games are a safe way to allow people to imagine different worlds.

The last example deals with economic coercion. This is something that businesses and countries have been subject to as we navigate the rise of authoritarian states. About two years ago, the Office of Net Assessment requested a study on how free societies should respond to economic coercion, so a game to simulate economic coercion was created. A large number of case studies and deep dives into real-world examples of economic coercion were used to design a series of interesting decisions. In this case, a fake country was used to avoid bias, and analysis was conducted on the different economic coercive instruments that a particular state could use over another state, and participants were able to visualize and describe the opportunity costs, which is often underemphasized. Because games are playful, they deal inherently with interaction, imagination, and decision-making, they are a vehicle to capturing high degrees of uncertainty, existing tendencies, and the potential that differentiates the present from alternative futures.

Games as a tool for analyzing interactions over time and worst-case scenarios

Another key aspect of games is that good games help players analyze interactions over time. A game should offer an analytical forum in which players can analyze possible exchanges they might have, either in an adversarial context such as a war, in terms of business competition, or in economic cooperation. How do you get countries or even organizations in government to cooperate?

One approach is to look at why systems fail. This particular example is from 2020—during the height of the COVID-19 pandemic. The U.S. government asked the U.S. Northern Command to be part of a red team to imagine how bad the pandemic could get. During the early stages, fear dominated a lot of the decision-making, and, in this case, the worst-case scenario needed to be understood. Racial injustice and protests were included in this model, since every pandemic in history has been associated with social and civil unrest. Transportation and logistics were also considered. In this case, games were not used in a playful way but rather to closely examine the types of interactions that could push the U.S. economy and society into a worst-case situation.

Another article, “Red Teaming,” was written in response to a request in 2015 by the newly appointed Head of the Army, General Milley, to think about what war would be like in 2035. Big organizations have real problems with making long-term forecasts, because they assume that the present will continue into the future. Assuming failure creates a contrarian perspective that helps senior leaders think outside the box.

Sometimes game theory and formal modeling can be introduced to complement human decision-making. It is one thing to bring together a group of subject matter experts and model a series of interesting decisions, but entirely another to abstract their decisions into a formal economic model that leads to a purer form of rationality. Both are constructive opportunities for obtaining valuable knowledge.

In one case, a large Fortune 100 company asked for assistance in understanding competition in the shadow of technology. We attempted to model and understand incentives for states to reveal new technology as a form of signaling in long-term competition. A good game should be complemented by other rigorous analytical methods.

Another important factor is identifying the right players who understand the decisions that need to be made. To model alternative futures, you need to select the right type of players with adequate expertise. This particular case focused on whether the existing structure of cybersecurity in the U.S. government was sufficient to protect critical infrastructure. Since this report assesses public-private partnerships, resilience, and questions of economic security that emerge from the benefits of interdependence, it is particularly relevant to the Japanese business world.

One of the central dilemmas of our modern world is that the more interconnected we become, the higher the assumed risk becomes. In network theory, this is called a scale-free network for which unless the key pieces of critical infrastructure are protected, the entire system becomes fragile and can be prone to sudden shocks.

Creating awareness for the ripple effects of cascading risk

While games can be used to model market potential, the most meaningful games deal with more creative forms of risk analysis and thinking about resilience. Most governments’ techniques for analyzing risk are fundamentally antiquated compared to private sector entities like the insurance industry. They tend to think of risk as independent and discrete, one-off events, while in reality, in a complex system, risk is often continuous and interdependent, meaning that there are cascading events that create other risk events. Focusing on categories of risk is productive.

One example of country risk is a project with the Taiwanese Banking Federation to understand possible actions by China that could cause shock and dislocation in Taiwanese society, such as a full-fledged campaign of economic coercion or a cyber campaign. Another example involving sector and regional risks is the energy sector in the Philippines and its exposure to China due to Chinese ownership of the energy grid, hydrocarbon resources located in disputed territory, and China’s overwhelming presence in renewable energy equipment. Through gaming, risks and trade-offs can be better understood when considering how to achieve energy independence without losing economic ground. Another regional example is Chinese investments in dams in the Mekong region and how this infrastructure produces downstream effects that impact livelihoods in the area. In this case, a game about water security was created.

The central theme of such games is to build them as an analytical vehicle to analyze complexity and understand risk in terms of a series of interesting decisions that different actors make. The goal is to find ways to mitigate risk, discover opportunities, and ultimately create more resilient organizations. In the case of individual companies, particular attention is paid to the assessment of cascading risks that could affect business operations. Such concerns became especially widespread following Russia’s invasion of Ukraine. Many companies are not only concerned about disrupted supply chains and lost capital, but also, and most importantly, about their employees being affected by such scenarios.

Analyzing all possible failures through the analysis and deep understanding of interdependencies allows for a more comprehensive approach to risk analysis, which ultimately leads to improved contingency plans. The more options you build for yourself, the easier it is to confront those complexities.

The guiding principles of TTX game design

At first, it may sound odd to have elected officials and company leaders play games, but games are one of the most natural things we do as humans. From a very young age, we play games. Sometimes, putting the most powerful people in a room where they can be playful, think, and imagine possibilities is more important than the outcome itself. It frees up creativity and provides people with deeper insights.

The first guiding principle is that games should not be too complex. Most firms and individuals who design games violate this simple rule. Ideally, a good game has simple rules—just like chess or go. Good game design is built on simplicity and selecting the right players to achieve meaningful insights. Without the simple rules and players with expertise, outcomes will be suboptimal.

Second, games should be short and insightful rather than long and tedious. Elected officials and senior business leaders have busy schedules, and game designers must be mindful of their audience. The shorter and sharper a game is, the more memorable it becomes for the players. While reports are typically written to analyze and share insights after TTX exercises are conducted, reading these materials is not the same as experiencing the game. Ideally, players remember the game vividly the next time they face a real crisis.

Third, capturing data is critical. Data for reports should be well-structured and linked to a set of assumptions that can be tested, probed, and analyzed. As a game designer, you should think like a scientist while playing like a child. The facilitator and data capture team must carefully observe players, documenting and analyzing their decisions. If permitted, AI technology can assist by analyzing conversations and providing deeper insights.

Finally, games should not be over-engineered. Many games attempt to model complexity by modeling every possible choice. The best approach is to let players’ decisions create complexity, rather than designing a complex framework and then placing players within it.

As we enter a world increasingly fraught with risk, using games as an analytical tool becomes ever more important. The more uncertain the system, the greater the need to think about tendencies, potentials, and alternatives. While no forecasting method can fully address such complexity, games are a powerful way to understand it, minimize risk, and build resilience—whether for a company or the economy at large.

Q&A

AIKAWA Yuta:
While it is true that games are an excellent way to understand the impact of each player's decisions and risk assessments in complex systems, the role of those creating scenarios as well as moderating and facilitating the progress of the exercise is highly important. What kind of qualities and experience do these professionals need to have? What about military experience?

Benjamin JENSEN:
Games are about modeling a series of interesting decisions, but having solid rules, the right scenario, and ideal players is not enough. Ultimately, it is about humanity. This is why people with high emotional intelligence who can read the room are essential. As facilitators, they play a key role in guiding the conversation and ensuring all players’ voices are heard. The best facilitators are empathetic and actively listen to people. Military experience does not necessarily equate to good facilitation. In fact, when running a business game, military experience can sometimes be counterproductive if the approach is overly authoritative. A good facilitator strikes a delicate balance between confidence and empathy.

AIKAWA Yuta:
Are private companies in the U.S. increasingly implementing TTX for assessments of economic security and other geopolitical risks? If so, is it more common to invite external experts or conduct these assessments in-house? In what industries are TTX mainly conducted?

Benjamin JENSEN:
Running these games is indeed becoming more popular, and individual approaches vary. For example, one large company invited my team to design a game for them, videotaped the crisis simulation session, and used the material to rerun the scenario in their individual business units. Bringing in outside expertise and then exploring internal use was a very creative approach. Companies are increasingly employing external experts to avoid internal biases. As an outsider, it takes a lot of time and energy to research and understand clients’ businesses and concerns in order to build a suitable game. It works best if the outsider becomes something of an insider.

Industries conducting TTX vary widely and include retail, food, energy, and finance sectors. Large companies are more likely to take this approach than small domestic firms focused on local business. Typically, the company’s industry is less of a factor; instead, it is about the degree of uncertainty in their business environment. Companies dealing with global supply chains and geopolitical risks have a particularly high interest in such games.

AIKAWA Yuta:
Regarding the behavior of the U.S., Japan observes a difference in judgment and principles of action between experts and the leader, President Trump. If we assume there is a divergence between top management and the common sense within other organizations, how should the other players in a game be defined?

Benjamin JENSEN:
American politics can indeed cause concern and shock around the world at times. In fact, demand for game services is particularly high when an unpredictable official is elected. Uncertainty also creates opportunities. If an election outcome and a newly inaugurated president are perceived as introducing greater uncertainty, it is the perfect time to conduct a game. One of the best red-teaming techniques involves “pre-mortem” games, where failure is assumed and base examination of both causes and solutions on the fact that failure has already occurred. This approach is highly effective for assessing political risks.

AIKAWA Yuta:
The use of TTX could also be very meaningful for various situations such as natural disasters and oil shock. Are there examples of governments successfully using TTX for this purpose?

Benjamin JENSEN:
Scenarios typically range from slow-burn events, such as cyber espionage or corruption, to sudden shocks, like the collapse of a government. Interestingly, slow, gradual events can be harder to analyze than sudden shocks. One recent project I worked on involved helping various companies and government officials stress-test a national resilience strategy using a series of case studies. Moments of crisis from the past—including a domestic terrorist attack, cyber incidents, and the accident that caused the collapse of the Francis Scott Key Bridge in Baltimore—were used to imagine future scenarios and analyze national resilience.

Most games are not exclusively about direct security challenges but also involve human security concerns. Modeling energy markets is particularly insightful in this regard, whether examining shocks related to oil, natural gas, or intermediate resources required for certain types of renewables. In such cases, games model how people respond to such shocks.