FP&A Guide Series
Gartner defines financial scenario planning as a strategic planning tool for improving financial forecasting by evaluating the uncertainties, risks and opportunities of multiple potential future states. The objective is to secure the best immediate outcome while also preparing suitable alternative action plans, which finance leaders can enact depending on how a situation unfolds.
The principles behind scenario planning have not changed in 2020 despite the frenetic changes in how finance operates as a result of the COVID-19 restrictions.
What changed were the conditions that surround the process – there is a greater sense of urgency to perform scenario planning, the frequency of doing the plans has increased, the process of collecting the data to be used in the scenario planning may have become more complicated, and so on.
To mitigate against the new risks that have risen the Association of Financial Professionals has released this AFP Guide to: Scenario Planning.
This guide will examine what scenario planning is, how to execute on scenario planning throughout the year, and provide practitioner examples of scenario planning. For FP&A to advise the enterprise in a world of changing information and uncertainty, we need to incorporate intelligence quickly (rapid reforecasting) and stretch the organizational mindset for the possibility of multiple future outcomes.
In this guide, you’ll learn how continuous and company-wide planning supports business agility by allowing your FP&A, operational, and executive teams to make data-driven decisions in response to unexpected shifts in market conditions.