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How do I forecast when something big has changed, like a pandemic or new competitor?
When the past no longer represents the future, treat the disrupted period carefully: flag or down-weight it, use shorter recent windows, rely more on scenarios and judgement, and update frequently. Do not blindly extrapolate or ignore the break. Track errors closely and widen your forecast ranges until patterns stabilise.
Options include:
- Marking the disruption with an indicator variable so the model does not treat it as normal.
- Excluding the affected period from seasonal estimates.
- Using leading indicators, such as enquiries, bookings or web traffic.
- Building scenarios for how quickly recovery or decline happens.
Be honest that statistical models cannot foresee unprecedented events. Keep a simple baseline running for comparison, and pair statistical output with input from people close to customers.
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