What If…? Scenario Planning Offers Many Benefits

Source: CGMA Magazine

In this article, Ken Tysiac shares ideas from forecasting expert Steve Player about how companies can maximize scenario planning to identify risks and opportunities:

• In addition to identifying the best- and worst-case scenarios, think through the steps to each extreme of the pendulum. Thinking incrementally will help you to consider more action steps in advance.

• Prepare for good and bad scenarios that are so good or bad you wouldn't normally even consider them. For example, consider the possibility of so much success that you can't spend all your money or maybe complete business failure. Pushing the envelope of the possibilities will help your team develop ideas for innovation and growth.

• Capitalize now on ideas that come from a worst-case possibility. Often, worst-case scenarios would push a business to sell idle assets to access cash. Player suggests selling those idle assets while things are going well, and reinvesting in better possibilities.

• Identify the warning signs of possible scenarios. The warning signs will help you determine your next action steps.

• Create a “playbook” of action steps for good and bad scenarios so that you're ready to counteract a negative possibility or take advantage of a positive possibility.

  For the complete article, read “How to identify risks, opportunities through scenario planning.”

  From CGMA Magazine, May 25, 2015, www.cgma.org.