I need to tap into the formal discipline of scenario planning, not make it up applying only intuition and common sense. So far I’ve found little online that isn’t already obvious. My organization has encountered what may or may not be a major negative game-changing event and we need to develop contingencies for what may be unpleasant states no one wants to contemplate (or feels they will be tagged “defeatist” if they voice them). For a little more context, mine is a
Scenario Planning -- Top 3 or 4 High-Impact Practices
Answers
My Scenario Planning Approach -
The first model produced is your expected scenario (Mid Scenario). Next produce scenarios to gauge the impact of assumption changes. For example, produce two additional models -
If your company has 25% more revenue than expected (High Scenario), what will be the impact on
But if your company has 25% less revenue than expected, what will you do (Low Scenario)?
There is value in knowing what you will do prior to the occurrence of the situation. If results are worse than expected, it is better to have a plan on what to do with controllable expenses. Keep the budget in a drawer and hopefully never need it.
This is not "scenario planning" per se, but it's a process that might prove to be very helpful for you.
We can't know the future, but, for any scenario we can and should say, "What needs to happen for this scenario to occur? Write down ALL the measurable drivers. Look at each one and decide if it is realistic. Monitor actuals for all the significant drivers and adjust the plan as necessary. To layer some scenario planning onto this, develop contingency plans for how to proceed in the event that each significant driver varies from where it "has to be."