What is Scenario Planning?

Navigate uncertainty 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 questions such as, Will there be fundamental changes to our business model? Will our customers’ behavior change? What new opportunities will arise? How can we position ourselves for resilience or uncover opportunity?

Key stakeholders are looking to the CFO and finance team to help provide answers and make the 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 modeling solution helps model for drivers across the financial statement to plan for short- and long-term cash flow to help make strategic decisions.

To read more about how scenario planning can help, download the full report (PDF).

The CFO’s Scenario Planning Starter Kit

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

Forward-thinking CFOs and their teams are using scenario planning to eliminate guesswork and be more prepared in times of uncertainty. Now, you can use driver-based planning by applying the variables that are most impacted by uncertainty.

Forecasting beyond a crisis

During these volatile times, businesses have been forced to react quickly. The increased uncertainty 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 not always 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 to cut costs and protect margins. With the overall objective of staying agile, businesses are developing alternative strategies to deal with these rapid changes.

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