Scenario planning and strategic forecasting

What EY can do for you

Companies need to quickly understand the financial ramifications of the pandemic and potential roads to recovery during this period of unprecedented market uncertainty. They face very different questions from their board, investors, regulators and new stakeholders on a wide variety of topics, such as customer demand, liquidity, supply chain stability and capital allocation. EY teams help companies tap into all of their data, better analyze different potential futures and understand implications for strategy, financial modeling, and operations in order to take control of demand forecasting and scenario planning.

We help clients make better informed strategic decisions based on a variety of projections, including the length of the recovery and other macro factors, a variety of growth expectations, the effect of the pandemic on supply chains, and key performance metrics. In particular, EY professionals can help companies to:

Identify and prioritize new KPIs and related key business drivers

• Define the key performance drivers based on macroeconomic, commercial and other market factors
• Include both demographics and psychographics to measure risks to customer demand
• Facilitate implementation of new technology and approaches to harvest and curate internal and external data, continuously update KPIs and embed drivers into financial planning and analysis (FP&A) tools

Employ robust scenario planning and stress testing

• Continuously generate hypotheses based on newly available data — and quickly model and stress test multiple courses of action
• Predict and plan for factors such as geographical spread of the virus, local governments’ response to it, and potential intervention strategies
• Help enable the evaluation of financial and operational trade-offs and opportunities associated with scenarios
• Utilize statistical analysis and predictive modeling techniques to quantify uncertainty and risk

Combine forecasting and corporate finance experience

• Provide tangible advice related to strategy, capital structure, and operations
• Develop robust plans to mitigate risk on downside scenarios, or capture incremental value on upside scenarios
• Evaluate strategic alternatives that may arise from changing operating models, commercial environments, and market or economic dynamics
• Understand the implications of shuttering or restarting capital programs to enhance capital allocation performance
• Assess portfolio options relative to potential acquisitions, divestitures and JVs — and how to generate additional value from each

Effective scenario planning markedly reduces the time required for companies to develop a viewpoint of the future business state as customer behavior changes. The right data, governance and analytical tools can position companies to better rethink their existing commercial and operating models and effectively plan to regrow their business beyond the pandemic.