In December 2023 the Bank’s Court of Directors commissioned its Independent Evaluation Office (IEO) to conduct an evaluation of whether the Bank uses horizon scanning effectively to inform decision-making and support its mission.
Summary
The Bank is faced with a turbulent and uncertain world. As a result, it needs to scan the horizon to understand and explore 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 issues. 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 the IEO to evaluate whether the Bank uses horizon scanning effectively to inform decision-making and future planning to deliver its mission. The evaluation looked at the full range of horizon scanning work within the Bank – covering structures and processes across policy, operational and organisational arms.
Findings and Recommendations
The Bank is proactive in horizon scanning, and most business areas have made an explicit choice on whether and how to use it. But we have observed substantial variation in tools used, as well as the underlying concept of and rationale for horizon scanning across different parts of the organisation.
Business areas have developed a range of structures and processes to support their horizon scanning activities. The current approach is very decentralised and heterogenous across the organisation. 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 there was evidence that efforts are not always fully joined up across different areas and there could be some inefficiencies on cross-cutting issues.
The Bank has taken 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. However best practice could be embedded more deeply and widely.
The IEO make nine recommendations, grouped into three themes. The first set are around developing a shared definition of horizon scanning and how it can benefit the Bank. The second set focus on how the Bank can enhance organisational architecture. The final set of recommendations focuses on the culture and community needed to support this.
IEO evaluation of horizon scanning
IEO horizon scanning evaluation: Bank response
