IEO evaluation of horizon scanning

Foreword from the Chair of Court

Central banks operate in a turbulent and unpredictable world. Decisions are made in an external environment of rapidly changing forces, where the future is uncertain, the effects of a given cause can be hard to predict and there are multiple ways to interpret the same set of signals. In the past decade the Bank has been faced with Brexit and a global pandemic, in the present it is dealing with the ongoing issues of artificial intelligence (AI), geopolitical fragmentation and climate change. In the future, challenges may include quantum de-encryption or disruptive Fintech.

In this context, it is important that the Bank has the right structures and approach in place to effectively spot, understand and adapt to changes in the external environment. Reflecting this, in December 2023, Court commissioned the IEO to review the Bank’s horizon scanning work.

The IEO report identifies many positive features of what the Bank currently does. Many areas have made a proactive decision about how to deploy horizon scanning, staff have developed a range of useful structures and processes to meet local area needs, and there have been valuable positive steps to broaden and deepen horizon scanning knowledge. At the same time, the Bank needs to ensure it has appropriate capabilities to identify, understand and react to fundamental transformative forces that have the potential to reshape the challenges it faces. And it could benefit from thinking more holistically about the implications of those forces for the organisation.

The IEO’s recommendations provide a strong foundation for achieving this. They make nine recommendations in total, grouped into three broad themes: developing a common understanding of horizon scanning and how it can benefit the Bank, creating an organisational architecture to ensure horizon scanning is appropriately supported, and using culture and community to increase the effectiveness of horizon scanning work.

At our 6 June meeting, Court welcomed the Bank’s commitment in taking forward these recommendations. We will monitor their implementation as part of the IEO’s follow-up framework.

David Roberts, Chair of Court
June 2025

Overview

The Bank is faced with a turbulent and uncertain world. As a result, it needs to scan the horizon for potential developments that could reshape the challenges it faces. These span not just the wide range of policy tasks a modern central bank has, but also operational and organisational challenges. To scan effectively, the Bank must consider the full range of developments and drivers, many of which are increasingly drawn from outside traditional economics, finance or central banking disciplines, as well as how they feed through the different parts of the Bank's mission, and ultimately consider the appropriate options for response. This is a distinct activity in its own right and separate from traditional ‘business as usual’ risk monitoring, which has always been a core part of central bank activity.

Against this backdrop in December 2023 Court commissioned an evaluation, to assess whether the Bank uses horizon scanning effectively to inform decision-making and support its mission. Our evaluation was primarily conducted between July 2024 and February 2025, drawing on interviews with internal staff and external practitioners, surveys of staff, observing meetings, reviewing horizon scanning materials and three case studies. We consulted an external advisor, Margaret McConnell, a lecturer at Yale University School of Management who was previously Head of the Applied Critical Thinking Function at the Federal Reserve Bank of New York. She provided support and independent challenge to the team throughout the evaluation and has reviewed and endorsed the findings and recommendations in this report. We were also supported by an expert panel of external practitioners (Cho Khong, Saïd Business School; Joachim Isacsson, Ministry of Defence; Paul Woods, Central Bank of Ireland and Jeanette Kwek, Centre for Strategic Futures, Singapore) and, internally, by a senior advisory group. Using our working definition of horizon scanning ‘Systematically exploring and understanding fundamental change, risks and opportunities that have the potential to reshape the challenges faced by the Bank in achieving its mission’, the goal was to look at the full range of horizon scanning work within the Bank – across policy, operational and organisational arms.

The headline question of the evaluation was ‘Does horizon scanning effectively support decision-making and future planning to deliver the Bank’s mission?’. In assessing this, the focus was on overall structures and processes, rather than evaluating any specific analytical judgements made or individual decisions taken as a result of the work.

This report summarises the findings, grouped under three key themes, which are set out below.

The Bank is proactive in horizon scanning, and most areas have made an explicit choice on whether and how to use it. But we have observed considerable variation in tools used, as well as the underlying concept of and rationale for horizon scanning across different parts of the organisation. As such, the first set of recommendations is geared around developing a shared definition of horizon scanning and how it can benefit the Bank.

Business areas have developed a range of structures and processes and we observe that this current approach is decentralised and heterogenous. This model appears to serve locally identified needs well and allows areas’ own technical expertise to be deployed to support those needs. At the same time we found some evidence that efforts are not always fully joined up across different areas and there could be some inefficiencies on cross-cutting issues. We therefore identified a set of recommendations to enhance organisational architecture.

We saw positive steps to grow skills and deepen knowledge in horizon scanning. Although formal products and processes are still relatively nascent at the Bank, there were clear signs of continuous development and progress. But best practice could be embedded more deeply and widely – so our final set of recommendations focusses on the culture and community needed to support this.

Overall, our recommendations are intended to build on the Bank’s current approach. They are intended to create a community of people engaged in horizon scanning, who can learn from each other, share work being done and provide testing and challenge to approaches adopted to help develop a joined-up view of the risks and opportunities facing the Bank and their implications. There are a number of different ways to implement our recommendations, with a variety of models used in other organisations, and it is for the Bank to consider the pros and cons of those models.

The evaluation was conducted by a dedicated project team reporting directly to the Chair of Court. The IEO team was: Melissa Davey (IEO Director), Dorothy Fouracre, John Lewis, Pooja Pattar and Alison Pollard. Support was provided at different points in the evaluation by Miles Bake, Jack Bullock, Daniel Hanley, Matt Jarman, Neve Riley and Will Sayers.

Context for the evaluation

The Bank operates in a world of ongoing and profound change. External practitioners often call this ‘VUCA’:^{footnote [1]} Volatile (change can be rapid and intense), Uncertain (the future path can be difficult to predict), Complex (many factors combine and intersect to determine the outcome), Ambiguous (conflicting signals make it difficult to identify emerging trends and underlying patterns). These forces of change that central bank decision-makers need to understand, go well beyond the economic and financial spheres, and the experience of the past few years has demonstrated the range, complexity and swiftness of new developments that contemporary central banks have to deal with in delivering their missions. Gabriel Makhlouf, Governor of the Central Bank of Ireland, notes ‘the current status quo is unlikely to prevail and in the uncertain world we are now navigating there is a requirement to augment our approach to governance and navigate uncertainty through future focused insights and dialogue’.^{footnote [2]}

This requires effective ways of working and tools to identify, understand and respond to those upcoming challenges and opportunities. In a Bank context, this need is grounded in the Bank’s 2020 Strategic Priorities, which called for ‘Bank decision-making informed by the best available data, analysis and intelligence’. It is also aligned with the Bank’s aim be an organisation that looks out and learns from the world around it and then applies those insights to maintain monetary and financial stability.

Within this context, Court commissioned the IEO to evaluate how horizon scanning informs decision-making within the Bank. We started the evaluation in July 2024 and completed work in February 2025.^{footnote [3]}

As the Bank does not currently have a single definition of horizon scanning, we developed a definition to set the scope of the evaluation (Box A). This was based on the existing literature, feedback from senior leaders within the Bank and our analysis of what would be feasible and most useful to evaluate. In this report we use the term ‘horizon scanning’ to refer to work that meets our working definition.

What is horizon scanning and how do others do it?

Although this evaluation uses the term horizon scanning, it has close parallels to the concept often referred to externally as ‘strategic foresight’. Strategic foresight is a structured and systematic approach of exploring plausible futures to anticipate and better prepare for change. During the latter part of the 20^th Century, national militaries and large companies played a key role in developing the tools and approaches that are commonly used today (Box C). Strategic foresight is seen as particularly useful in organisations where decisions have large sunk costs, delivery takes significant time and there are vulnerabilities to changing external environments.

Strategic foresight aims to distil thinking about potential futures into a number of scenarios. Many external organisations that we interviewed stressed that this process is not about predicting the future or identifying one modal scenario. Instead, it is a ‘what if’ experiment to explore what the future would look like if certain developments were to unfold, how that would affect the organisation and what actions need to take place to enable the organisation to be prepared.

Practitioners suggest the following (partially overlapping) organisational benefits:

Robustness: Foresight increases the robustness of decision-making by considering different ways in which the future might play out and their implications for the organisation. Where there are choices to be made on policies or resourcing, the option that works in more than one scenario can be prioritised. It can also help organisational preparedness.

Monitoring change: Exercises include the identification of indicators that signal if a scenario is (or is not) beginning to crystalise. These help guard against confirmation bias and allow decision-makers to spot changes earlier.

Responsiveness: Formulating scenarios and conducting what if exercises can reduce or bypass the need to get a consensus across stakeholders on the central narrative, its probability or its proximity. Having formulated different scenarios and associated high-level responses help the organisation move more quickly once the state of the world becomes clear, rather than waiting for certainty before working on the what if. This can be particularly useful in organisations that have a tendency towards slower, consensus-based decision-making. 

Communications: Socialising scenarios internally raises awareness about the external environment and builds understanding of the forces driving change. This increases buy-in for institutional change among staff.

Cultural benefits: The discussions and exercises run when developing scenarios and the process of challenging the assumptions behind decisions can both be valuable in their own right. For example, they can highlight institutional blind spots, bottlenecks and shortcomings, which can in turn foster change. More broadly, discussions can support an adaptable culture where leadership is open to seeking improvements and helps decision-makers see past the shorter term.

Horizon scanning at the Bank of England

Although a relatively nascent discipline at the Bank, many areas of the organisation use some form of horizon scanning to support their activities and decision-making. This happens in a decentralised manner, with each area able to decide at a local level whether and how to use it. There is no formal Bankwide policy, framework or guidance for horizon scanning activities, so local approaches have grown up more or less organically. Although it is difficult for business areas to quantify their resource spend on horizon scanning, they generally estimate that expenditure is small.

A variety of horizon scanning approaches and techniques are employed around the Bank. These include the structured development of scenarios, scanning for emerging risks, war gaming exercises and gathering market intelligence. Box B summarises some of the externally developed horizon scanning tools available, some of which the Bank uses. Not all areas put an explicit time frame on how far ahead they look when horizon scanning. Where they do, around two to five years is most common but with substantial variation at either end: across the Bank, the range is one–100 years. In some areas, horizon scanning is clearly delineated from business as usual work, while in others it overlaps with or runs alongside more regular analysis.

Most horizon scanning takes place in support of policy-related decisions. It is used less frequently to guide organisational or operational decisions in business areas though one notable exception was the 2019 Future of Finance Report, which reviewed the future of the UK’s financial system, and what it might mean for the Bank of England’s agenda, toolkit and capabilities over the coming decade. It is not used routinely for strategic planning across the organisation as a whole, for instance informing decisions on staffing model or identifying the skills needed in the Bank. Some horizon scanning does take place in non-policy areas, notably parts of Technology, with others stating they intend to start using it in the future.

Approach to the evaluation

We identified the overarching evaluation question ‘Does horizon scanning effectively support decision-making and future planning to deliver the Bank’s mission?’. We subsequently developed evaluation criteria and five specific questions that informed our data collection and analysis.

The questions were:

1. Does the Bank have a good common understanding of what horizon scanning is and how it can support the Banks mission?
2. Does the Bank use a sufficiently broad range of inputs in its horizon scanning processes?
3. Does the Bank deploy the right tools, resources and skills to support effective horizon scanning?
4. Is horizon scanning effectively incorporated into decision-making?
5. Does the Bank have an effective framework to support horizon scanning?

To explore these, we conducted an extensive evidence-gathering exercise, drawing on six main sources:

• Interviews: Within the Bank, we spoke to over 75 colleagues across more than 60 meetings. We interviewed 21 external organisations with relevant expertise and established horizon scanning functions. These included peer policy institutions, academics, think tanks and a range of private sector bodies. We placed particular emphasis on institutions with similar functions to the Bank (including international organisations and other central banks), and other bodies involved in policy (including intergovernmental institutions, UK government and intelligence organisations).
• Staff engagement: We conducted two surveys of producers of horizon scanning work. We followed up with targeted focus groups that included horizon scanning product owners, specialists and staff that use products.
• Observations: We observed internal staff and committee meetings where discussions about horizon scanning were taking place and reviewed materials that informed discussions.
• Case studies: We looked at materials developed over the past 10 years relating to horizon scanning on AI and geopolitics.
• Internal stakeholders: We regularly met with an internal panel of senior Bank staff, consisting of 12 members drawn from across the organisation.
• We consulted with one external advisor, Margaret McConnell with significant experience in the field of horizon scanning. Additionally, we formed an expert advisory panel of representatives with expertise from academia, national governments and the private sector who worked on horizon scanning or led a strategic foresight/futures teams.

Themes and recommendations

Theme 1: Develop a shared definition of horizon scanning and clarify how it can help the Bank achieve its mission

Although business areas are clear about how they understand horizon scanning and why they use it (or do not), the variety of interpretations around the Bank could be leading to some inefficiencies. In our interviews, almost all colleagues could clearly articulate what they thought horizon scanning was, and in some business areas this is codified in documents that record processes and their outputs. Many, but not all, areas have made explicit and informed decisions about whether and how to use horizon scanning, including which tools or approaches to use. Teams that conduct horizon scanning were able to explain how it contributes to their work or mission. In fact, some expressed a desire to do more as they could see its potential use, but they typically lack the resource or structure to do so. We observed that the definitions, approaches and tools used across the Bank under the umbrella of horizon scanning varied significantly. Local areas generally expressed satisfaction with their chosen approaches. However, we observed that further benefits of horizon scanning could be achieved from a common understanding, especially in places where horizon scanning activity is limited and/or doesn’t feed through to decisions. As such, our first three recommendations focus on the Bank clarifying how horizon scanning can help deliver its mission.

Recommendation 1: Develop a common definition of horizon scanning as an activity distinct from business as usual work

There is no Bankwide definition of horizon scanning, nor is there any commonly agreed terminology. Local definitions differ materially and often describe a particular tool or workflow, rather than the underlying concept itself. External practitioners emphasised that, to be effective, horizon scanning should be a separate activity to business as usual analysis. In some parts of the Bank, however, the distinction between horizon scanning and business as usual is blurry, with work bleeding into or being presented alongside regular analysis. Practitioners also told us horizon scanning should, by definition, be an exercise in exploring things that are uncomfortable for decision-makers, and as such should be presenting more challenge than reassurance. Given this, we think that the Bank would benefit from establishing a clear definition of horizon scanning for Bankwide use, that distinguishes it from business as usual and supports work to present challenge. A common definition might also boost the sharing and applicability of relevant information more widely, complementing the structural changes that we propose in Recommendation 5.

Recommendation 2: Establish a shared purpose for horizon scanning and how it can support the Bank to achieve its mission across all areas of the organisation, including using it to identify opportunities as well as risks

Horizon scanning currently has more of an influence on policy than organisational or strategic decisions. For example, there are regular horizon scanning updates at the Prudential Regulation Authority’s Supervision Risk and Policy Committee and, over the past year, a set of scenarios have been developed for discussion by the Financial Policy Committee. On the organisational side, horizon scanning is only discussed at Executive Risk Committee, and the evaluation did not identify any explicitly earmarked horizon scanning slots at other Bankwide Executive Committees. There is little evidence of it informing directorate level organisational planning. Relatedly, the Bank does not currently utilise horizon scanning as part of its strategic planning process, although colleagues from Change and Planning have indicated a desire to make more use of it. Conversations with externals emphasised the potential benefits of horizon scanning for organisational strategy, including using it to identify opportunities, for example potential efficiencies. Yet across the organisation, horizon scanning is largely used to inform discussions of risk. We therefore recommend articulating a vision for how horizon scanning can support the Bank’s mission across the full breadth of policy, organisational and operational business areas, perhaps aided by a set of scenarios on key cross-cutting trends for use across different areas (see Recommendation 4).

Recommendation 3: Identify the horizon scanning tools and approaches the Bank can use to inform discussion and decision-making

Government and private sector organisations have devised a range of tools to facilitate strategic foresight, of which horizon scanning is a part (see Box B). A variety of tools and approaches are used around the Bank, but there is varying awareness of the external toolkit available. One horizon scanning process, for example, is based upon on the Oxford Scenario approach, with two members of staff involved having completed the relevant training. But in some other areas, tools seem to have mostly developed from existing methodologies that are familiar to the Bank (eg interviews, reading published materials and desk-based analysis). Respondents in our survey of horizon scanning producers reported that they generally feel they have the knowledge to conduct this activity and proficiency in the use of relevant tools. However, few interviewees talked about specific tools by name, and it was not evident that staff were selecting the most appropriate method from a broader toolkit. It follows that the Bank could be missing out on using the right tool for the right purpose. Therefore, it should seek to increase familiarity with, and use of, external tools, to inform and reinforce colleagues’ horizon scanning capabilities.

Theme 2: Create effective organisational architecture to support horizon scanning

Our case studies and internal interviews indicated that local areas have developed a range of useful structures and processes to support their horizon scanning approaches. The Bank has a decentralised approach to horizon scanning and interviews with senior leaders suggest that this approach is generally meeting individual areas’ self-identified needs. Local areas are making informed decisions about their horizon scanning frameworks based on their needs, but they have diverse levels of knowledge and expertise. Structures that have been established to support local horizon scanning cover the development of products and processes, outreach activities to seek input from other business areas, mechanisms for training and skills transfer and channels for sharing with other stakeholders at working level. Staff who produce horizon scanning materials frequently exchange materials and demonstrated co-operative behaviours in terms of sharing work. Our impression was that staff were enthusiastic and open when discussing their products. Our case studies on AI and geopolitics found evidence of a rich range of work being done on a variety of aspects, as well as some potential improvements, largely based around reducing structural frictions to information flow and better joining up of efforts. Accordingly, the next three recommendations relate to how the Bank can improve its organisational architecture to store and manage knowledge.

Recommendation 4: Formulate and implement a vision of the desired operating model for horizon scanning

The current horizon scanning operating model is decentralised and heterogenous across business areas. This setup emerged incrementally from independent local choices rather than any structured Bankwide decision-making process. Most senior leaders are content that their own products meet the objectives they were designed for. However, we identified a lack of an overall Bank approach, with potential inefficiencies given the cross-cutting nature of many of the risks and opportunities being considered. In comparison to most of the external organisations that we interviewed, the Bank’s operating model is one of the more decentralised. Most organisations with an established horizon scanning capability have some form of a central team. These teams come in a variety of forms and are usually very small; often as few as two people. Externals noted the benefits of central teams in terms of co-ordination, professionalisation, efficiency and challenge rather than replacing local area capabilities and activities. As such, the Bank may wish to undertake a pilot project to assess the value of a more joined-up Bankwide approach to develop a common set of scenarios (see Recommendation 3). This could include a small co-ordinating team, either virtual or physical, with horizon scanning expertise, supported by subject experts from local areas. The Bank could also consider having a senior level horizon scanning ‘champion’ to act as a focal point for work and an advocate in decision-making.

Recommendation 5: Improve co-ordination across business areas and policy/operational/organisational arms

There is active interest at both staff level and more senior levels in horizon scanning, and there are informal discussions of emerging risks-taking place between colleagues from different teams. However, processes are somewhat siloed between different parts of the Bank, and so knowledge and expertise do not flow freely between business areas, especially policy, operational and organisational arms. This is especially true for cross-cutting topics, where the relevant network of stakeholders may be larger, harder to identify and less correlated with existing structures, reporting lines or working groups. Staff in one area of the Bank are not always well sighted on – or in some cases aware of – others’ work. Independent of the operating model chosen under Recommendation 4, the Bank would benefit from exploring how co-ordination between areas could be improved and reflecting on how the underlying apparatus could be developed to support co-ordination and join up thinking. This includes working level structures for discussion and sharing of materials, co-ordination of product timetables, processes for considering cross-cutting trends, ways of escalating/sharing material across decision-maker groups and working arrangements between any central unit and local areas.

Recommendation 6: Establish and maintain a central repository for all products, materials and resources

Our review of materials and interviews with staff show that there is a lot of proactive work on horizon scanning. However, awareness, use and citation of other areas’ products is uneven. A key challenge is the practical difficulty in searching for and finding other areas’ work as products are stored across a variety of internal folders, intranet sites and other platforms. Most current efforts to share products take place when they are produced; but because horizon scanning work often has a longer shelf life, our view is that access to the ‘back catalogue’ of existing work is at least as important as sharing ‘new’ work. The benefits of sharing go beyond the results of the analysis themselves and include sharing of and understanding analysis of trends, assumptions and other activities. We therefore recommend that the Bank sets up and maintains a comprehensive one stop shop for materials with dedicated accountability for its upkeep.

Theme 3: Foster a culture and community that supports effective horizon scanning

The Bank has taken a variety of positive steps to build culture, support staff to exchange knowledge and incentivise learning about horizon scanning. For example, staff have been supported to attend training courses on the Oxford Scenario Planning Approach and train their colleagues in how to use this approach. Different teams have created work environments to help build a culture of increasing professionalisation and learning and contribute to more efficient activity. External organisations highlight the value of tailored facilitation techniques and support to enable decision-makers to effectively engage with horizon scanning products and support for staff to exchange knowledge and improve their skills. While we have seen steps in the right direction, this best practice could be incentivised and embedded more broadly and deeply across the Bank (Box C). We have identified aspects of the Bank’s culture and community that could be developed to help further embed good practice across the organisation, and these form our final theme.

Recommendation 7: Increase engagement with external organisations to ensure their experiences, insights and challenge inform horizon scanning activities

The Bank brings a range of external views into the horizon scanning process, but the extent and nature of this engagement varies across business areas. Good practices that were identified during the evaluation include: outreach to other organisations that use similar tools, regular external engagement to gather intelligence such as the market intelligence horizon round and external publication searches. Some staff felt constrained about external engagement, particularly in the later stages of work because they were uncertain about how much they could share on their thinking when materials were being drafted for senior decision-makers. External organisations identify best practice as a high level of engagement with external experts and organisations at all stages of the process. Regular and strategic engagement has helped them make greater use of external insights, prevent groupthink, and ultimately develop more useful scenarios. Senior decision-makers within the Bank and committee members also note the value of external engagement for these purposes. The Bank is making good steps in this regard, but hasn’t yet reached the level, degree and scope of external engagement that organisations with more established and highly effective horizon scanning functions have. In this regard, we recommend increasing external engagement, at all stages of the horizon scanning process, supported by an explicit set of guidelines (similar to those governing market intelligence or research interactions) on setting out parameters under which staff can interact with external experts.

Recommendation 8: Ensure committees can effectively engage with horizon scanning through tailored facilitation techniques and sufficient time for discussion

The Bank is developing various ways to support committees in horizon scanning. For example, it is starting to include horizon scanning agenda items within meetings and developing tailored documents to guide discussions. However, there is less differentiation from, and more alignment with, business as usual in products than external organisations with established horizon scanning functions would recommend. Externals identify the value of allocating longer timeframes for meetings where horizon scanning products are discussed, structuring and scheduling specific meetings or awaydays with more interactive and discussion-focused agendas. Some recommend the Chair ceding their role to, or co-chairing with, either the person who developed the materials and/or who is trained in horizon scanning. Discussions need to strike a balance between the scenarios themselves and the implications for decision-making. There also needs to be a recognition that that these exercises often will not have the precision of business as usual work. To support the committees to effectively engage with horizon scanning we recommend that the Bank more systematically uses these ways of working and considers separate, horizon scanning specific sessions or away days for decision-makers.

Recommendation 9: Develop a horizon scanning cadre to share knowledge and improve collaboration across the Bank

Interviews show that many Bank staff understand the value of sharing knowledge about horizon scanning and ensuring their skills are up to date. However, staff lack the mechanisms to do this in ways that fully meet their needs. This is partly because staff working on horizon scanning are scattered across many business areas, rather than forming a critical mass in any one place. External organisations have highlighted the value of professionalisation and learning about horizon scanning. Some have built up more of an identifiable network or practitioner community to overcome some of these barriers and support staff to develop professional skills, exchange knowledge and co-ordinate work. We recommend developing an explicit strategy to build community, develop skills and boost exchange of knowledge. This could offer benefits such as increased understanding and application of best practice, share technical skills and enhance organisational culture around horizon scanning.