Your Guide to Scenario Planning & Financial Modelling
January 31st, 2024
What Is Scenario Planning? Types of Scenario Planning Which 3 Major Scenarios Should You Consider in Scenario Planning? What Is Financial Modelling and What Is It Used For? Become an Expert in Scenario Planning and Financial Modelling FAQs
- How to create an effective scenario plan?
- How does scenario planning benefit aspiring financial planners?
- What are the benefits and limitations of scenario planning?
- Why choose upGrad Campus to learn scenario planning and financial modelling?
What Is Scenario Planning?Scenario planning is a method business leaders adopt to be ready with plans for all kinds of possible futures. They identify all ranges of potential outcomes as well as the impact they can have. This includes both positive and negative possibilities.
Types of Scenario PlanningThere is no one-size-fits-all. Just like how every business is unique, its scenario planning needs to be unique as well. Different businesses can use any of the following general types of scenario planning:
- Initiative-based scenario planning: Layering different initiatives and their combinations on the baseline scenario.
- Multi-level driver-based analysis: A ‘what-if’ analysis incorporating dependent and independent drivers.
- Single variable sensitivity analysis: Changing one variable while keeping others constant.
- Operational scenario planning: Exploring the immediate impact of events to form short-term strategies.
- Normative scenario planning: A planning based on how the company prefers to operate in the future.
- Strategic management scenario planning: Scenarios based on the environment of consumption of products/services.
- Quantitative scenario planning: Financial models presenting the best and worst cases with the help of model outputs.