What is Scenario Planning?

Chart a path to growth with scenario planning

Today's uncertain economic landscape has shown us that business leaders can’t place their bets on one outcome. Instead, they’ve had to ask, “Will there be fundamental changes to our business model, and to our customers’ expectations?” “What new opportunities will arise?” “How can we position ourselves for recovery and growth?”

Key stakeholders are looking to the CFO and finance team to help provide answers, and to make tough decisions that will have a lasting impact. Enter scenario planning, a tool that gives finance the agility to model multiple “what-if” scenarios and assess how to best respond to each one. This strategic planning method integrates cash flow and business forecasting, so organizations can balance short-term needs with long-term priorities.

If you’d like to read more about how scenario planning can help, download the full report (PDF).

The CFO’s Scenario Planning Starter Kit

How can finance plan accurately in a time when business models, the economy, and technology are undergoing rapid changes? What happens when outlier events hit and your organization isn’t prepared?

Forward-thinking CFOs and their teams are using scenario planning to eliminate guesswork and to be more prepared in times of uncertainty. You can, too, using these best practices and first steps.

Forecasting beyond a crisis

During these unpredictable times, businesses have been forced to think differently. The pandemic has heightened the importance of short-run planning and forecasting to stay on top of a rapidly changing environment.

But approaches that are based simply on historical analysis or year-over-year comparisons are no longer viable. Which is why finance leaders are turning to scenario modeling and rolling forecasts as more effective methodologies to manage through uncertain times.

CFOs are developing plans against the base, best, and worst-case scenarios, while others are analyzing different scenarios, incorporating assumptions related to economic recovery, government policy, or market demand factors. With the overall objective to stay agile, businesses are developing alternative strategies to deal with the post-crisis world.

Learn how scenario modeling in Oracle Cloud Enterprise Performance Management (EPM) enables finance teams to make proactive decisions in times of extreme short-term uncertainty.